Facebook offering e-retailers sales tracking tool

SAN FRANCISCO — Facebook Inc wants more credit for making online cash registers ring.

Facebook will begin rolling out on Friday a new tool which will allow online retailers to track purchases by members of the social network who have viewed their ads.

The tool is the latest of the new advertising features Facebook is offering to convince marketers that steering advertising dollars to the company will deliver a payoff.

Facebook, with roughly 1 billion users, has faced a tough reception on Wall Street amid concerns about its slowing revenue growth.

“Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers,” said David Baser, a product manager for Facebook’s ads business who said the “conversion measurement” tool has been a top customer request for a long time.

The sales information that advertisers receive is anonymous, said Baser. “You would see the number of people who bought shoes,” he said, using the example of an online shoe retailer. But marketers would not be able to get information that could identify the people, he added.

The conversion tool is specifically designed for so-called direct response marketers, such as online retailers and travel websites that advertise with the goal of drumming up immediate sales rather than for longer-term brand-building.

Such advertisers have long flocked to Google Inc’s Web search engine, which can deliver ads to consumers at the exact moment they’re looking for information on a particular product.

But some analysts say there is room for Facebook to make inroads if it can demonstrate results.

“The path to purchase” is not as direct on Facebook as it is on Google’s search engine, said Debra Aho Williamson, an analyst with research firm eMarketer. But she said that providing information about customer sales conversion should help Facebook make a stronger case to online retailers.

“It lets marketers track the impact of a Facebook ad hours or days or even a week beyond when someone might have viewed the ad,” said Williamson. “That allows marketers to understand the impact of the Facebook ad on the ultimate purchase.”

Marketers will also have the option to aim their ads at segments of Facebook’s audience with similar attributes to consumers that have responded well to a particular ad in the past, Baser said.

Online retailer Fab.com, which has tested Facebook’s new service, was able to reduce its cost per new customer acquisition by 39 percent when it served ads to consumers deemed most likely to convert, Facebook said. Facebook defines a conversion as anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter.

New opportunities

Shares of Facebook, which were priced at $38 a share in its May initial public offering, closed Thursday’s regular session at $22.17.

In recent months, Facebook has introduced a variety of new advertising capabilities and moved to broaden its appeal to various groups of advertisers.

Chief Operating Officer Sheryl Sandberg said in October that Facebook saw multi-billion revenue opportunities in each of four groups of advertisers: brand marketers, local businesses, app developers and direct response marketers.

Facebook does not disclose how much of its ad revenue, which totaled $1.09 billion in the third quarter, comes from each type of advertiser. Pivotal Research Group analyst Brian Wieser estimates that brand marketers and local businesses account for the bulk of Facebook’s current advertising revenue.

Earlier this year, Facebook introduced a similar conversion measurement service for big brand advertisers, such as auto manufacturers, partnering with data mining firm Datalogix to help connect the dots between consumer spending at brick-and-mortar and Facebook ads.

And Facebook has rolled out new marketing tools for local businesses such as restaurants and coffee shops, including a revamped online coupon service and simplified advertising capabilities known as promoted posts.

The new conversion measurement tool is launching in testing mode, but will be fully available by the end of the month, Facebook said.

source: interaksyon.com

Facebook’s mobile surprise allays growth fears

SAN FRANCISCO — Facebook Inc grew mobile advertising revenue several times in the third quarter, a faster-than-expected pace that helped drive shares in the world’s No. 1 social network nearly 13 percent higher.

Facebook said on Tuesday that it now gets 14 percent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.

Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.

“This certainly dispels the most bearish view, that Facebook couldn’t monetize people on phones or tablets,” said Colin Sebastian, an analyst with Robert Baird & Co.

“In about a six-month period they’ve actually started to generate decent revenues form their mobile applications,” Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads and that they can deliver results for marketers.

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook’s overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook’s long-term prospects.

Advertising revenue increased 36 percent to $1.09 billion, up from 28 percent growth in the second quarter. But revenue from its payments and other businesses increased just 13 percent to $176 million.

Mark Zuckerberg, the 28-year-old chief executive who created Facebook in his Harvard dorm room, said mobile was the “most misunderstood aspect” of the company and took issue with the “myth” that Facebook could not earn money on mobile.

“Over the long run we’re going to see more monetization per time spent on mobile than on desktop,” Zuckerberg said on a conference call with analysts on Tuesday.

The company’s shares leapt nearly 13 percent to $21.97 in after-hours trading on Tuesday.

Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.

The shift to mobile has challenged many of the Web industry’s top companies. Google Inc is the No.1 provider of smartphone software with its Android operating system. But the company missed Wall Street’s revenue targets in the third quarter, with some analysts blaming the shortfall on its increasing reliance on lower-priced mobile ads.

Social game maker Zynga Inc, which announced layoffs of 5 percent of its staff on Tuesday, has suffered as it struggles to translate its hit games to mobile devices and as the use of its games on Facebook’s service declines.

Not pleased with gaming

Zynga’s woes were visible in Facebook’s results, with Facebook’s payments revenue from the maker of Farmville down 20 percent year on year.

Zuckerberg said he was not pleased with revenue from gaming, but said that beyond Zynga – which accounts for 7 percent of Facebook’s total revenue – the situation was brighter.

“The interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year, since payments has been adopted,” he said.

Zuckerberg also said Instagram, the photo-sharing app that Facebook acquired for roughly $750 million this year, now has 100 million users, up from 27 million when Facebook bought the company.

Facebook posted a net loss of $59 million or 2 cents a share in the three months ended September 30 after booking a big provision for income taxes. Excluding share-based compensation and income tax adjustments, it earned 12 cents a share, a penny higher than the average analyst expectation.

Facebook Finance Chief David Ebersman said the company would continue to invest aggressively during the fourth quarter, though the company did not provide a specific financial outlook, in keeping with its previous practice.

Ebersman said that the total number of ads that Facebook delivered in the third quarter increased 27 percent year-on-year and that the average price per ad increased 7 percent.

Facebook’s third-quarter mobile revenue marked a big jump from the second quarter, when Facebook said that it was generating more than $1 million a day from a new class of ads that appear in users’ newsfeeds. Facebook said that roughly half of that revenue was from mobile ads, suggesting that mobile advertising revenue totaled $45 million in the second quarter.

Stifel Nicolaus analyst Jordan Rohan said that Facebook’s mobile ad revenue was impressive, but said that Facebook needs to proceed carefully so as not to damage the user experience by overloading its service with too many ads.

And he said that Facebook’s desktop PC advertising business appeared to have shrunk by about $40 million from the second quarter. Rohan said he would rather see the desktop ad business remain stable as the mobile ad business grows.

Facebook’s third-quarter revenue of $1.26 billion was a hair above the average analyst expectation of $1.23 billion, according to Thomson Reuters I/B/E/S.

source: interaksyon.com

What does Facebook's stock listing mean for users?

WASHINGTON (AFP) – If you are one of the almost one billion people who use Facebook, you are unlikely to notice any major changes when you sign in this weekend.

Facebook's entry to the stock market – expected Friday – will be a timeline-shaking corporate event, but users may find nothing new to like or dislike.

Expect the same babbling wall posts, ill-advised photos and links to the weird and wonderful dark corners of the Internet.

But a few years from now, the ripple effects of Friday's events could make things look dramatically different.

From now on, the company will come under relentless pressure from profit-hungry investors to monetize you, the humble Facebook user.

"Going public could certainly change the user experience within Facebook," said James Lenz a professor of business at Rice University.

Lenz and other experts predict Facebook users will have a more business-focused and ad-soaked experience.

"Meeting quarterly (earnings) expectations will be the most difficult hurdle for Facebook," he said. "The stakes will continually become higher as stock price pressures mount."

Users who check their news feed on a mobile device will likely see the first changes.

"If you want one concrete change that is going to influence the user experience -- look at mobile," said Rebecca Lieb of the Altimeter Group, a new technologies consultancy. "You are going to start seeing ads."

Amazingly, on the eve of a $77-$96 billion IPO, Facebook still makes almost no money from its mobile products, which do not feature ads.

In its sales pitch to investors, Facebook said that was something it wanted to rectify quickly.

And like mobile users, website users should expect more a more business-friendly site, but not necessarily a stream of traditional company advertisements.

"Facebook needs to maintain the familiar look and feel of its pages while incorporating timeline, social app updates and sponsored ads," said N. Venkat Venkatraman of Boston University.

Instead Facebook will likely try to develop a new type of advertising: expect more product endorsements from friends, more scope to 'check in' to specific restaurants and businesses and more company-backed pages to "like."

"They are not necessarily going to be ads in the form of media buys," said Lieb. Facebook "is really blending paid, owned and earned media into new messaging channels."

Whether there are more dramatic reforms at hand -- perhaps even a pay-to-use 'Facebook plus' -- will equally depend on founder Mark Zuckerberg's willingness and ability to satisfy the relentless logic of quarterly earnings reports.

Indeed balancing income generating innovations without riling users will be the central challenge for the freshly listed company.

"If Facebook alienates its audience they won't have an audience, and they can't monetize that audience," said Lieb. "We've seen other Internet giants not follow the demands of their users and fail."

In the past Facebook has not always proved adept at threading the needle.

It has frequently run up against allegations of flouting privacy agreements and selling personal information to companies.

And recent history is replete with cautionary tales of the pitfalls of putting quarterly profits before consumers.

"Relationships take time to build, but can quickly be destroyed as we saw with MySpace," said Rice University's Lenz, pointing to the spectacular decline of the company after it became part of Rupert Murdoch's News Corp.

Similarly Netflix had long been the darling of the tech world, building a customer base by providing a cheap and easy way to watch movies.

"One bad move, in this case, splitting the streaming business from the mail subscription segment, alienated its users to the point that the stock quickly dropped," said Lenz.

But there are also examples of how things can go well.

Notwithstanding foul ups over its entrance into China, Google has won plaudits since its 2004 listing.

"Google's owners came out and said, 'Well, we understand that we need to look at quarterly earnings, we will consistently have our eye on the far horizon and investors in this company should be aware of that,'" said Lieb.

"I think it absolutely has worked."

So far Zuckerberg is talking the good fight: assuming the role of apostle for a social network that can improve people's lives and make bank at the same time.

That will either turn out to be incredibly naive, or the mark of a man who, in some significant way, transforms Wall Street, Madison Avenue, Silicon Valley and people's lives, in one fell swoop.

source: mb.com.ph