Facebook is out to prove it can drive store purchases

Dec 16, 2014

Facebook has become increasingly driven to correlate ad impressions on its platform with purchases in physical stores, seeing these cross-channel analytics as vital to its further growth as a marketing platform.

Although Facebook’s marketing services, in the scheme of things, are still in their infancy, growth in 2014 has been impressive. Revenue from advertising was nearly $3 billion in the latest quarter, a 64 percent year-over-year increase. As a point of reference, the New York Times’ combined print and digital revenue for that period was $365 million. With 1.3 billion users, Facebook has nothing but upside growth potential.

And yet, marketers are migrating their funds from traditional media too slowly for Facebook’s liking and so the company is keen on dispelling the notion that social media is too nebulous a marketing channel to replace TV, print and radio.

While connecting browsing and purchasing behavior is now a mainstay of e-commerce marketing analytics, most consumer purchases still occur in physical stores. Further, store purchases are increasingly influenced by digital media messaging, making the cross-channel data that much more essential. And yet, tracking actions from cyberspace to the store shelf has proven to be quite a challenge. It doesn’t hurt that a company with deep pockets like Facebook is working hard at it.

In the last couple of years, Facebook has invested in an array of companies and technologies to build up its capabilities, according to PCWorld. The company introduced its Custom Audiences targeting tool in August 2012 and has been beefing it up with new features and refinements since then. Custom Audiences allows retailers to match in-store shoppers with their Facebook accounts by way of an email address, phone number or name.

Facebook uses an encryption method known as "hashing" to make sure private information is not shared, so the benefit of Custom Audiences comes in aggregate data that demonstrates how well ads are influencing in-store sales.

Although connections are limited to in-store customers who use credit cards, loyalty cards or other forms of ID capture, Brian Boland, Facebook’s VP of advertising technology, says they are matching a very meaningful number of transactions. "We can see quite a bit of the purchase history," he told PCWorld.

But Facebook knows they’re not the only game in town when it comes to digital marketing, so through its diverse acquisitions, the company is broadening its scope beyond its own borders.

In 2013, Facebook acquired Atlas from Microsoft, which allows marketers to track ads served on web and mobile outside of Facebook. The company’s Audience Network, a system announced earlier this year, allows marketers to place ads in publishers’ apps. And LiveRail, another acquisition, enables video ad targeting to specific demographics.

What do you see as the greatest benefits of having reliable analytics that connect online ad impressions to in-store purchases? How might such insights influence merchandising and the use of in-store media?

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6 Comments on "Facebook is out to prove it can drive store purchases"

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Mohamed Amer
Mohamed Amer
6 years 9 months ago

Having reliable analytics in an omni-commerce world is critical to making the right investment decisions about your brand and effective reach to your best customers, that “golden segment.” Connecting the dots between the online ads and the purchase made (irrespective of it being in-store or online) is at the heart of advertising.

For Facebook, this increases its attractiveness as an advertising platform vis-a-vis traditional media with more robust return on investment projections. For retailers, it helps them justify online ad investments and accelerates their move to omni-channel retailing. Additionally, it helps them capture more data points on specific customer behavior leading to purchase transactions.

As marketers begin to view the world through the experience of their customers, they are helping to erode the existing silos inside the retailing organization. A wealth of opportunity exists in the use of in-store digital media that can further enhance the marketing and merchandising functions to enrich the customer experience and further pinpoint the effect of visual merchandising/signage.

Ben Ball
6 years 9 months ago

Recent studies posit that social media is replacing traditional media as the source of product awareness, consumer perception and endorsements of efficacy—all because people trust friends and other accepted influencers more than they trust TV or print. This makes intuitive sense in today’s socially driven world.

So—Facebook (social media) is replacing traditional media in the pre-shopping phases of the path to purchase. Plus it has the added benefit of being able to continue into the shopping environment with the consumer, and to serve as the feedback mechanism for customer experiences. What’s not to like as a marketer?

As for accurate measures of in-store influence, the measures Facebook is offering may be better than what we ever got for TV/print, but does that really matter? Sure, those measures are and were the holy grail for marketers. But so long as the body of evidence tilts toward social media as the key influencer for shoppers, so will the marketing budgets.

Kenneth Leung
6 years 9 months ago

Reliable omni-channel analytics are one of the holy grails for retail. The ability to tie a click to a shopping cart online is easier to do given ability of browsers and tagging. Tying to in-store purchasing requires linking to shopper profiles, credit cards, etc., but it becomes critical to justify marketing spending. Another result is you would be able to measure what items perform better in-store (which is more expensive to adjust merchandise) through social than online (which is easier to adjust).

Ralph Jacobson
6 years 9 months ago

Social Media Analytics is one of the most top-of-mind areas our CPG clients are talking about with us these days. The good news is that insights from the technology available today takes the gut-feel out of decision making based upon the insights. Gathering information on what people are saying in social channels can definitely drive merchandising decisions. If Facebook can be consistently leveraged by brands, then this is certainly a productive way to gain consumer insights.

Shep Hyken
6 years 9 months ago

The better the analytics and data, the better a retailer will be able to target special promotions to their customers via Facebook. The right info will save the retailer money and make their campaigns more successful. Now, Facebook has to prove they can do it.

J. Kent Smith
6 years 9 months ago

There’s really no other way to reliably track cause and effect, to understand the ROI. That being said, part of marketing’s role is to maintain the buzz, to keep a brand or store or whatever in the headspace. Click and buy is the ultimately in immediate gratification for the advertiser, but the effects of things like Facebook—immersing into the community—surely go beyond that. The question is probably not so much “if” a presence there is valuable, but where else it needs to be and if direct conversion is the only real measure of effectiveness.


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