Facebook is widely considered as the world’s largest social network, so unless you’ve been living under a rock for the last few years, the company really needs no introduction. However, for the sake of better understanding the importance of the later portions of this article, let’s take a quick look at the company’s profile (forgive the pun).
The company was established in 2004 by Mark Zuckerberg, and was initially designed to be an exclusive network for Harvard students. It was an instant hit and period of rapid growth soon followed. During such time, several offers were made to buy out the company. 2006, in particular, marked a significant milestone for Facebook. On this year, one of the biggest names on the internet, Yahoo, made an offer to buy the company for $1 billion not once, but twice! It was in rejecting the offers that Mark Zuckerberg earned notoriety as the “kid who turned down a billion dollars”.
By 2011, the social network could boast an active user-base of 400 million, with over 50% going online every day. It is mainly with these impressive figures that internet marketers, especially those that focused on social media marketing, turned their attention on the potential goldmine. In fact, by the same year there were already 3 million active pages on the site. Roughly 1.5 million, or half of these pages, were owned by local business owners.
Moreover, the social network has a user-base that extends to more than a hundred countries all over the world. In fact, 70% of Facebook users reside outside the United States, and the popular website is translated in over 70 languages.
Despite all this success though, the social network never really took a step in monetizing its operations until 2006, when it struck a deal with J.P. Morgan Chase to promote a product of theirs using banner ads. Nonetheless, this deal paled in comparison to Facebook’s biggest revenue model, Facebook Ads and Pages for Brands, which launched in the last quarter of 2007.
Later on, through much study and experimentation, social marketing experts found that users did not want to leave Facebook just to explore an externally-linked ad. In fact, a recent study by a reputable research company, Forrester, shows that only 1% of a typical site’s visitors come from a social media URL. Another study shows that e-mail marketing produces a click-through rate of 11% and a conversion rate of 4%, while Facebook only generates 1% and 2%, respectively. For internet marketers, this meant attempting to sell their products mainly through the Facebook platform alone, or to at least build a fan page to improve the brand’s positioning. The new social marketing channel is known today as F-Commerce.
F-commerce has been defined as the use of Facebook as a platform for facilitating and executing sales transactions. As an eCommerce marketing tool, it has had mixed reviews. Some claim that it has the potential to be lead internet marketing to new and exciting grounds. Its transactions were even predicted to supersede those of the internet giant, Amazon, within the next five years. That’s a revenue stream of approximately $34 billion!
On the other hand, there are also several studies discounting its effectiveness. A report in Bloomberg was even jokingly entitled “An ‘F’ for F-commerce?” Other studies claim that the positive reviews for F-commerce were outlandish and far-fetched. While the aforementioned Bloomberg report claims that F-commerce doesn’t work, some people might be inclined to disagree.
First off, let’s talk about, Wharton School of Business Professor, Stephen Hoch’s comment detailed in the report. Prof. Hoch says, “Whereas [brand] websites can categorize and organize social media, blogging and other engagement devices in a form that is easily navigated and searched, this is not true of Facebook, where all relevant postings are listed in a linear order based on time of posting. My guess is that Facebook is actively working on how brands can better link their brand pages to their [own] websites.”
A person marketing on Facebook will be quick to point out that the professor’s claim to a linear and chronological arrangement of posts is wrong. Facebook actually uses Edgerank, a system similar to Google’s acclaimed Pagerank system, to sort information based on relevancy. While we are definitely not discrediting Prof. Hoch’s proficiency in traditional marketing, it is fairly clear that he just misses the whole point of F-commerce. The marketing channel exists to keep users on Facebook. It is not there to encourage externally-linked ads. If it were so, they wouldn’t charge 45% less for clicks that keep users on the social network.
The Bloomberg report proceeds to quote, Forrester Research analyst, Sucharita Mulpuru saying, “But [selling on Facebook] was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
To that we simply say, “so what?” Throughout the years, businesses have been able to sell products to people while they are “hanging out with their friends at the bar.” Take hanging out at Disneyland for example. Sure you are there to have fun and relax, but at the end of the day, how much did you spend on memorabilia, food, and other purchases that were made on a whim? We could go on to discuss how people spend money while window shopping at the mall, watching popular sporting events, and attending concerts, but you probably got the point from the Disneyland example alone.
People trap themselves in Disneyland much like they trap themselves on Facebook. The consumer’s aren’t there to buy products, but they do so nonetheless.
The other facet of F-commerce is actually inserting your eCommerce store straight into facebook. There are a number of services and software packages that can accomplish this goal. The few clients of ours that have tried it have reported lackluster results. They will point out, though, that they’re still making some sales; however, the costs of implementation plus monthly fees from the F-commerce software are currently wiping out any profits.
Like internet marketing once was, F-commerce is still an evolving marketing channel. Sure there are a few things that need some tweaking, but as long as it persists, it definitely has some great potential. The Bloomberg report condemned it right away. That’s where it went wrong. It is premature and much of the data that has been presented there might not apply a few years from now.
F-commerce enthusiasts just need to remember to stick to the basics and concentrate on the 4P’s of marketing. Price and product already need to exist before attempting F-commerce. The place needs to be Facebook, and much like any other eCommerce store, you need to follow some rules on customizing and utilizing the features of your page. Nonetheless, the most important P to remember in F-commerce is promotion. It isn’t as simple as posting daily status updates and shout-outs. Like any other traditional marketing effort, it needs to be innovative and immediately catch the reader’s attention. A marketer, especially an internet marketer, has the responsibility to be creative and brainstorm newer, better ideas.
Like any other eCommerce effort, F-commerce simply needs time, attention, and a healthy marketing budget for it to be effective.
