For & Against Facebook Commerce

posted on 13th Apr 2011

Will Facebook commerce work? That is the multi billion euro question that has been asked and answered many times in the past few weeks. The success, or failure, of Facebook commerce could have a serious impact not only for brands looking to invest their marketing spend, but also for Facebook which has worked so hard in the last 18 months to create an environment that supports marketing activities.

There’s two arguments, lets look at both first. In a follow up post I will outline my own thoughts on f-commerce.

Facebook Cannot Drive Financial Activity

It all kicked off with Forrester Research and Millward Brown weighing in on the ‘No’ side. The two heavyweights insist that it’s not possible to link financial activity with Facebook. Interestingly the Forrester research highlights a lack of click throughs on Facebook ad’s compared to paid search or e-mail marketing. The report did say there were some brands who were successful in generating sales via Facebook, especially those who distributed digital goods or who had a unique sales model. More on this later. Facebook had very little to say directly about the report but was quick to point out that when a Ticketmaster fan posts directly to a friends wall about an event, an average of $5.30 is generated – social activities can influence sales, also called a Facebook Effect. However, one example in the face of a Forrester Research report does not make a strong argument. Although I did see this link crop up on Twitter a few times in the last week – a list of Facebook Ads Case Studies, from Facebook. An indirect response perhaps?

Millward Brown says ‘No… but maybe’

Millward Brown’s research was conducted amongst 24 marketers, and over 3,000 fans. 23 of the marketers said they will be increasing their spend on social media in the coming year. Only 23% remarked the ROI to be good, 18% average and 9% said it was poor, which leaves a lot of ‘don’t knows’. The report does point to using social media for generating insight, advocacy, loyalty and engagement for brands. The intangibles that can mean nothing to brands, but I don’t think this is the case for every brand? In the words of one its impossible to ignore a website that has 600 million members who spend an increasing amount of time on it.

Facebook Already Drives Commerce

Flying in the face of both these reports comes this post from Social Commerce Today, which outlines brands who are already using Facebook to drive commerce. There’s some very interesting stats contained in the full post which is worth a read. The most interesting of which are;

2-4%: Facebook store conversion rates – on a par with web-stores (avg. 3.4%, according to Forrester/Shop.org – yes that same Forrester)

1 Million+ Starbucks customers using their e-commerce-enabled Facebook CRM loyalty program

1300: Number of products added every week to the ASOS f-store

The click-through rates on Facebook walls are 6.5%, much higher than online advertising

40%: The drop in Coca-Cola’s website traffic in the past year, but Coke’s Facebook page is up and is now the world’s most popular Facebook brand page (22m)

117% the additional amount a fan will spend on a brand compared to a non fan

51% the increase in likelihood a customer will purchase, after clicking the ‘like’ button

The list is fairly exhaustive and the author posted a follow up list of f-commerce success stories here, which is also worth a read.

The Social Media Perception Gap

Earlier this week the UK based Engage Sciences released the results of their own research conducted amongst 1000 consumers and 350 business executives. The research asked each group what they expected from social media, the answers given by the consumer and by the business executives differed as the graph below demonstrates. Consumers expect discounts and purchases, while marketers think product information is what they want. Perhaps a bridge over this gap is required.

Food For Thought?

That’s plenty of food for thought. In my next post I’ll outline where I think f-commerce is going, what’s holding it back and look at how one brand which shouldn’t have made f-commerce work did just that.