Builds Shops Into Pages
The company is building out shops within Facebook Pages, essentially mini e-commerce sites that give businesses a chance to set up second homes within its walls. The shops are still in the testing phase, but some already feature “buy” buttons that allow the entire shopping experience to occur within Facebook — from product discovery to checkout.
“With the shop section on the page, we’re now providing businesses with the ability to showcase their products directly on the page,” Facebook product marketing manager Emma Rodgers told BuzzFeed News.
If it works, bringing storefronts directly to Facebook Pages could have a transformative effect on online commerce, as retailers embrace the platform not just to inform their customers, but to sell directly to them.
Facebook does not currently take a percentage from product sales on its platform, but the company’s history does contain instances where it’s rolled out products with favorable terms for businesses only to roll back those terms when it decides it needs to make more money. Companies, for instance, once paid Facebook to build up likes on their page so they could communicate with their “likers” in their newsfeeds. But then their posts stopped showing up as often, so they were compelled to pay to reach the same people with advertising. Given the size of the commerce pie, the temptation to circle back and monetize will be there.
Commentary: There is something completely suspect about an ecommerce platform within their walled garden that doesn’t take a percentage. In fact the evil cackling laughter that came spewing forth from my mouth serendipitously should tell you that it is a bait-and-switch tactic. There is no way in the world this could even be feasible without taking a percentage. Secondly, as you will see below about half of their ad revenue comes from sources outside the US. Proportionally however the US with a mere 15% of the users manages to account for 52% of the advertising dollars which means it is US dollars fueling this revenue.
This is significant in that most of these advertisers are from North America (not sure if that lu is a way of including Mexico & Canada in there to boost it but it ties in with international companies reportage for stockholders – so it is all we have) and yet it still leaves out what you can see from a simple viewing of the platform. There has not been one significant ad from an international or global entity. Where are the Coca-Colas or the Apples? In fact the only time I’d see ads would be on their mobile app, which was uninstalled over a year ago, so thankfully I’m spared that. If you can think of any please feel free to leave in the comments below. They used to use their logout screen to wrap the page in a brand, the most notable to me was Progressive Car Insurance. Not sure how that worked out for them, but I don’t see that plan used anymore.
That said it defies clear & simple logic that an ad platform that has no recognizable ads, nothing in the way of what make us consider it a legitimate platform is suddenly the darling of wall street. There is some shenanigans going on, and it isn’t all mobile video ads – as the COO, lean into it Sandberg would have us believe. As you can see from the first quote below there are 25 MILLION facebook pages that they consider small-to-medium sized businesses. Yet only 1 million of them advertise. That is a paltry percentage and actually is encouraging to me, for it would have seemed to generate this ad revenue that they’d nickel & dimed every last one of those 25 million with their “Boost This Post” now scheme. Making you pay for what was once a given is exactly how they plan on doing with the “shops” they are introducing. However Etsy’s and such should be very worried.
Further Reading & Considerations:
Facebook Expands Definition Of SMBs
Dan Levy, who leads Facebook’s small and medium business team, told me there are now 25 million Facebook Pages for SMBs, and 1 million of those businesses are active advertisers.
Back in April, Facebook said there were 15 million SMBs with Pages, but that was under the old definition. According to Levy, the company only counted businesses that had a physical location, whereas now it’s including e-commerce companies that may not have a brick-and-mortar store but aren’t big brand advertisers either.
Facebook is counting SMBs based on three criteria, he added — they must have a Page that’s been active in the past 28 days, it must be a business Page (rather than personal one), and they can’t be one of Facebook’s “managed clients” (those clients are the company’s big advertisers).
Facebook has been working to simplify its ad products this year, for example by launching “objective-based” ad-buying, and Levy said that’s already beginning to pay off with more SMB advertisers, but he added that the company has just “started that journey.”
“We continue to hear feedback from small businesses and incorproate it, and we still have a lot of potential left,” he said.
As for the mobile ads that account for 49 percent of Facebook’s revenue, Levy argued that Facebook is a great way for SMBs to establish a presence on smartphones — by creating a Facebook page and advertising on Facebook, they automatically have “a mobile marketing presence” and “a mobile advertising strategy” without doing any extra work.
70%+ of Facebook’s revenue is mobile
Facebook continued to cruise, posting revenue of $3.45 billion, up 42 percent over the same period last year. The shift to mobile continues, with 73 percent of its revenue coming from mobile ads as compared to 59 percent for this period last year. On the earnings call, Zuckerberg dropped one interesting detail. Facebook now sees over one billion searches on mobile every day.
The company had net income of $1.19 billion, up 28 percent compared to $926 million for the first quarter of 2014. The company saw more than four billion daily video views. “Video is exploding on mobile,” said COO Sheryl Sandberg on the earnings call.