The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
The members-only site says it can target specific consumer groups on the social network.
There is a sharp difference between ads on Facebook and those on Google, says Greg Bettinelli, HauteLook’s senior vice president, marketing. Search engine ads respond to a customer’s intent—for instance, serving up a “Kate Spade Handbags” ad when a consumer searches for a “Kate Spade Green Purse”—while Facebook ads are more about discovery.
“People aren’t looking for something specific on Facebook,” he says. “That means you have to find a way to be relevant to them.”
For HauteLook, No. 191 in the Internet Retailer Top 500 Guide, that means serving up interesting content in each ad, such as inviting consumers to a private sale that takes place on the social network. And because of Facebook’s vast amount of data, provided by consumers supplying their demographic information and preferences for specific retailers, products and activities, a marketer can market with precision to particular consumer groups.
For example, when the retailer works with social commerce technology company 8thBridge Inc. to host an Urban Decay sale on Facebook that is only open to Facebook members who follow HauteLook, the retailer can target women in a specific age range who Like specific cosmetic or beauty brands.
The retailer also targets consumers who Like its competitors, such as Gilt Groupe.
“If I know that a consumer Likes our competitors, she probably should Like us too,” says Bettinelli. “And the same thing is true if we know that they Like the brands we sell.”
The key is finding how to make a message resonate. That may include an invitation to a private sale, as well as other methods, such as including an interesting video in an ad.
Many of HauteLook’s messages are aimed at luring consumers who are likely to be interested in private sale sites or the brands sold on Hautelook to Like the retailer on Facebook. And, once the consumer Likes the brand, Facebook enables HauteLook to market to her, encouraging her to sign up to become a member of Hautelook.
That can be a cost-effective marketing tactic, because the cost of acquiring a new member of Hautelook is considerably more than the e-retailer pays for a click on a Facebook ad, says Bettinelli, who would not provide actual costs. But the math is straightforward. If, for example, it costs $10 to acquire a new customer to sign up on HauteLook.com the retailer might pay $1 for each click on one of its Facebook ads. That means if the retailer can acquire one new customer for each 10 ads it places, it breaks even in its costs. And, if it can beat that ratio, Bettinelli says, attracting one new customer for every nine ads it places, it comes out ahead.
“We think we can acquire new members for less over time doing it that way,” says Bettinelli.