Facebook and Twitter make moves to turn social into an e-commerce proposition
- Summary:
- Two of the world's largest social networking platforms are making moves to enter the e-commerce game, as new features and acquisitions aim to integrate online buying with social.
When you're in publishing, your business model is constantly evolving and changing. Everyone has a different approach and it can be tricky to nail down
exactly how to make your money, when essentially your product is the content that you give away for free. This is no different for Facebook and Twitter – yes we mostly view these sites as social networks, but essentially they are a new breed of publishers. Facebook and Twitter rose to prominence off the back of an active and growing user base that has been relentless in self-publishing content, and their respective CEOs have managed to make money by being able to say they have a reach of X-million people. This has largely been through advertising to date, which makes sense, and both are doing okay on that front.Facebook's push in recent years to focus on mobile ads was a smart move by Zuckerberg, who announced in the first quarter that ad revenue from mobile was up 30% from a year a go, which in turn helped push revenues up 72% to $2.5 billion. Equally, Twitter's year-on-year revenues were up 119% in the first quarter to $250 million. Not too shabby.
The success of advertising through social networking sites is still up for debate – see Den's post on how well (or unwell) Facebook seems to know him and the poor experience he has had being served ads on the site, for example. My personal viewpoint is that brands can do a hell of a lot on Facebook and Twitter themselves without having to advertise (I too find the ads annoying, irrelevant and distracting), but there does seem to be the appetite there to buy ad space on the social networks. And while there is appetite, Facebook and Twitter will make the most of it.
However, this doesn't mean you can stand still. Who knows how long selling standard ads through social networks will remain relevant? As we all know, the internet's favourite pastime is disrupting business models and so neither Facebook or Twitter are going to assume that this is how they make their revenues from here on out.
And as a result, last week we saw some interesting announcements from the social networking giants that indicated that they are both ready to get into the e-commerce game. Who can blame them? It was recently estimated that B2C e-commerce sales will hit a whopping $1.5 trillion this year and the likes of Amazon and eBay continue to see growth and revenues soar – even when they are hit with such difficulties as high profile cyber attacks. People are finding it increasingly convenient, and cheaper, to do their shopping online – whatever the product. If Facebook and Twitter are successful and can get a slice of the e-commerce pie, this could not only mean more healthy revenue streams, but it could also provide more meaningful metrics for the companies to prove that they are indeed a useful 'channel' for brands.
Facebook's announcement last week was rather understated, where it simply announced in a blog posting that it would be introducing a 'Buy' button to help businesses drive sales through the site's News Feed and Pages. It said:
As you can see from the image, the 'Buy' button looks like quite a nice addition to an ad and it certainly is a plus that you can purchase a product without ever leaving the site. The current test is limited to a few small and medium sized businesses in the US to allow Facebook to gather feedback, but you can imagine what companies will be hoping for with this feature. Imagine a situation where some brand or company does something clever for their product and it goes viral on social networks, with friends sharing a campaign on their own feeds. If in this situation it was then possible to easily buy the said product by simply clicking a button on Facebook, then you can imagine that this would be a useful channel for driving sales. Obviously this relies on a company putting together some sort of clever campaign, but we see those all the time. The other scenario is targeted ads being delivered to my news feed, but as we've pointed out already and from our experience, Facebook needs to get a hell of a lot better at serving up ads that are really tailored to its users. I can't think of a single thing I would have bought from an ad on Facebook to date, if I had been given the opportunity.With this feature, people on desktop or mobile can click the 'Buy' call-to-action button on ads and Page posts to purchase a product directly from a business, without leaving Facebook.
We’ve built this feature with privacy in mind, and have taken steps to help make the payment experience safe and secure. None of the credit or debit card information people share with Facebook when completing a transaction will be shared with other advertisers, and people can select whether or not they’d like to save payment information for future purchases.
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Meanwhile, Twitter announced last week that it has acquired CardSpring, a payments infrastructure company, for an undisclosed sum. CardSpring has basically created an API that allows retailers and publishers to use digital to connect with their offline shoppers. For instance, if you see an offer or a promotion on a website, decide to register for it, CardSpring then ties this up with your bank card details and when you go to pay in-store, the promotion automatically kicks in. Not only is this useful for consumers, but it also allows retailers to track when an offline shopper actually started their shopping journey online. Simple, clever and useful. Twitter didn't give too much away in its blog post, but CardSpring provided a bit more detail and said the following:
We started CardSpring with a vision to develop a new type of platform that enables digital publishers and retailers to work with the payment industry to create a new generation of commerce experiences for hundreds of millions of offline shoppers. We see the intersection of payments and digital media as an opportunity to revolutionize how consumers use credit and debit cards, while helping retailers to connect and communicate with their offline shoppers - much in the same way the Internet has enabled online stores to create relationships with their online customers.
When we started talking with the Twitter commerce team, we quickly realized our philosophies were perfectly aligned, and by joining them, we’d be able to significantly accelerate our vision. So we’re making it official and are joining the flock! At Twitter, we will continue to grow the adoption of our platform and work with our publisher, financial, and retail partners to create new, innovative commerce experiences for consumers.
This isn't Twitter's first indication that it wants to make a commerce play – after it hired Nathan Hubbard, the former president of Ticketmaster, who has been tasked with ways to figure out how to let people buy goods directly from tweets. Some recent examples of this include being able to buy goods from
Amazon by connecting your Twitter account with the retailer and then tweeting at any Amazon product link with #AmazonCart. Starbucks also recently allowed you to gift a coffee to a friend by tweeting at somebody, who would then receive a $5 eGift card.Although these are modest moves, I think it's safe to say that both Facebook and Twitter are marking a clear intention to get its users to buy through social networks. Only time will tell whether this will be successful, this is still very much unchartered territory and both appear to be taking low-risk approaches that don't alienate their users. Which is a good thing. Having the option to buy goods and products via Facebook and Twitter when it's something you want, when it's being served to you when it's convenient for you, or when you need it and if it's easy to buy – then the sites very well may become another channel for retailers to consider. However, if they move too far away from their core purpose – being interesting and fun social media sites – people very well may get pissed off with being asked to buy stuff all the time and user engagement may decrease as a result.
They both need to handle this sensitively and test ways to make this useful for their respective users, without becoming annoying sales sites.