Facebook’s latest tool aims for Wall Street recognition

20 November 2012
By Daniel Smith
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Facebook have released a new tool to allow online retailers the ability to track purchases made by users who have viewed their ads.

The new retail tracking tool, realised last Friday, is the latest in the new line of advertising features Facebook now offers to convince marketers that steering advertising dollars to the company will lead to greater profits.

With a rough estimate of a billion users, the biggest-used social networking website currently faces a tough reception on Wall Street amid concerns about its slowing revenue growth.

David Baser, a product manager for Facebook's ads business, said: "Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers." Baser has said the "conversion measurement" tool has been a top customer request for a long time.

Sales information that advertisers will receive is said to be anonymous, confirmed Baser, stating: "You would see the number of people who bought shoes," using the example of an online shoe retailer. Baser added that marketers would not have access to information that could identify the people personally.

The conversion tool is specifically designed for so-called direct response marketers, such as online retailers and travel websites that advertise with the goal of drumming up immediate sales rather than for longer-term brand-building.

Advertisers have been frequently aligned to Google Inc's Web search engine, a company which can deliver ads to consumers at the exact moment they're looking for information on a particular product. Yet some analysts see room for Facebook to make inroads if it can demonstrate results.

Debra Aho Williamson, an analyst with research firm eMarketer, says that the purchasing is not as embedded in Facebook’s user-interface as it is on Google’s search engine.

Williamson said that information on customer’s sales conversion will assist Facebook in making a stronger case to online retail.

She went on to state: "It lets marketers track the impact of a Facebook ad hours or days or even a week beyond when someone might have viewed the ad.

That allows marketers to understand the impact of the Facebook ad on the ultimate purchase."

Advertisers will also be given the option to direct their campaigns to Facebook users with similar attributes to consumers who’ve responded well to a particular campaign in the past, said Baser.

Online retailer Fab.com, which has tested Facebook's new service, was able to reduce its cost per new customer acquisition by 39 per cent when it served ads to consumers deemed most likely to convert, Facebook said.

Facebook defines a conversion as anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter.

This tracking-tool is one in a new line of opportunities for Facebook.

Shares of the company closed last Thursday at a price of $22.17, a dip from their price at $38 a share in its May initial public offering.

Facebook have introduced a series of new advertising capabilities, broadening its appeal to various advertising bodies in recent months.

Chief operating officer Sheryl Sandberg said in October that Facebook saw multi-billion revenue opportunities in each of four groups of advertisers: brand marketers, local businesses, app developers and direct response marketers.

Facebook advertising revenue totalled at $1.09bn in the third quarter but the company does not disclose how much of its ad revenue comes from each type of advertiser.

Analyst Brian Wieser at the Pivotal Research Group estimates that brand marketers and local businesses account for the bulk of Facebook's current advertising revenue.

Earlier this year, Facebook introduced a similar conversion measurement service for big brand advertisers, including auto manufacturers, partnering with data mining firm Datalogix to help connect the dots between consumer spending at brick-and-mortar and Facebook ads.

Facebook also have rolled out new marketing tools for local businesses such as restaurants and coffee shops, including a revamped online coupon service and simplified advertising capabilities known as promoted posts.

The new conversion measurement tool is launching in testing mode, but will be fully available by the end of the month, Facebook said.

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