Q: What are your thoughts on Facebook’s Q214 earnings call?
The biggest takeaway is that social is dominating mobile. This is abundantly clear.
Mobile is at scale and moving incredibly quickly and what is really interesting is that the pace of this growth continues to be pretty spectacular. What this means for marketers is that if they don’t embrace social mobile by executing their campaigns with this context in mind, they will literally be left behind. There is going to be (and, already is) a set of marketers at large and small businesses alike that understand the performance they can drive and how to be innovative in new marketing channels and there is a set that will not move quickly enough or just never fully grasp the importance of social mobile. This bifurcation will quickly separate those able to drive ROI from social mobile and deliver real business outcomes from those who are not. I cannot emphasize enough how fast the new social mobile context is moving and how important it has become.
The other underlying theme we heard from the earnings call is that Facebook is stealing share from Google on mobile in a big way. We do not hear too many stories of Google losing market share so this certainly made for some interesting subtext. Going in a little deeper, Facebook has a structural advantage over Google in mobile. Google is built around optimizing the page rank on a single site/page. Conversely, mobile performance marketing requires the use of many ad and landing page combinations so marketers can easily and quickly 1) measure results and 2) drive better outcomes in mobile. This format works great in Facebook but does not work as well in an ecosystem built for building rank for a single destination page or website. Because of this, I think we are going to continue to see Facebook stealing share away from Google. This is sure to get Google’s attention. Most definitely, it already has.
The other two notable points in the earnings call was the emphasis on video and ecommerce.
Video speaks to moving over television ad dollars and really the massive growth in video-based digital advertising. When you think about it, other than retargeting, video is the only category of traditional display that has been growing so it makes sense for Facebook to focus on video – not just to continue to shift TV ad dollars to it but to go after one of the larger and faster growing segments within traditional display.
Finally, the introduction/testing of Facebook’s buy button is a really strong signal to retailers and ecommerce pure plays that Facebook is committed to driving purchase transactions. It’s important to realize that these are not indirect transactions – where a consumer sees an ad on Facebook and then goes on to purchase at a later date, through a different channel – but, an ‘in the moment’ transaction.
On the call, it was apparent that Sheryl worked really hard to draw the line between actually selling product and enabling product sales (i.e. they don’t compete with Amazon). However, the line starts to get blurry when you consider: Facebook has a payment method attached to a profile for millions and eventually hundreds of millions of users, products can be easily and artfully presented to users in their social mobile feed and that the feed enables a way for users to actually make a transaction. Retailer or not, this line is blurred.
The key takeaway here for marketers is that for those focused on driving purchases and transactions, Facebook and Facebook mobile in particular is going to be (and is) a great vehicle for accomplishing those goals.
Q: In regards to the buy button, what hurdles do you think (if any) Facebook will need to overcome in order to establish trust with users and cement the network as a safe and secure channel for online shopping? And, is it possible?
The hurdles will vary depending on business size.
For small or midsized businesses (SMB), establishing trust is absolutely possible. As a user, I would trust a Facebook buy button over a checkout option from an SMB. Facebook has such presence and mindshare out there that I think people see it as one of the more sophisticated Internet companies and as such, would feel confident purchasing through the channel. On the enterprise side of the equation, the differential isn’t as big in terms of trust but in my opinion, people are apt to trust Facebook equivalently to these larger businesses.
I think that the biggest trust hurdle will not be between Facebook and users but between Facebook and the large ecommerce and retail companies. It will be about how much of their buy signal (transaction-implied data) they will be comfortable sharing with Facebook. These companies will need to decide whether they want to embrace the relationship with Facebook and all the advantages that come with it in terms of a high-performing social mobile channel or if they feel like they need to shield those buy signals.
Q: In an effort to provide more, sophisticated targeting to advertisers, Facebook has already partnered with third-party data providers like Datalogix and Acxiom. Do you think that the buy button is a step toward collecting a pool of transaction-implied data, not just of the purchase behavior online and in physical retail but of the products and types of products purchased through Facebook specifically?
Absolutely. The data is just as valuable to Facebook if not more valuable than the transaction itself. And, this is probably what gives the large, multi-channel retailers the biggest pause. For offline purchases, they have accepted releasing this data out to partners to be used for all sorts of things and now, accepting the buy button will be the equivalent.
Q: So, is accepting the buy button on Facebook inevitable for businesses looking to drive transaction outcomes from social mobile channels?
I would agree with that. I think the benefits outweigh any perceived risk.
Most importantly, the consumer wins on this. Anything that makes buying easier and more seamless in mobile environments is positive and consumers want that. Taking friction out of a transaction or any kind of online consumer behavior is a win, even if you have to pull the business side kicking and screaming into it.
Lastly, with more sophisticated targeting options, users will see more of the ads that are applicable and interesting to them. The promise of great digital advertising is that the consumer literally likes the ad. The industry is not quite there yet but with the vast profile data available, Facebook and Twitter have the best shot of achieving this.
#MCPOV
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