But the social network’s advertising revenue grew 18.4% during the quarter.
Harnessing the power of Facebook, retailers find that 'Liked' products can be top sellers.
With over 600 million members or "friends," Facebook is the most powerful of the online social networks. Online retailers are discovering new ways to harness this power not only to increase their sales, but also to influence buyers through the virtual word-of-mouth that the Facebook Like button enables.
The way it works is simple. Individuals, companies, or groups create Fan pages on Facebook where they can post updates. Facebook members can become a fan by simply clicking the Like button located on the fan page. Fans then receive updates posted by the page creator.
Companies have begun to integrate this feature into their own web sites, allowing them more exposure through this social network. This is an efficient way for retailers and manufacturers to let their customers and Facebook fans know about new releases of products, events, and special offers and coupons. The added benefit to retailers is that anyone connected to the person who Liked the item will also be exposed to the product when they see the Facebook News Feed of the fan of the brand.
Up until a few months ago, retailers only went as far as allowing members to become fans of a brand as a whole. Lately, however, a new trend has emerged. Merchants such as Levi's and Amazon now use the Like feature at a product level. How does this work and what does it mean for you as an online retailer? Let's look at Levis.com.
In the screenshot example below, Levi's has integrated Facebook's Like feature into the product information for each listed item. The jeans maker also shows how many people have Liked each pair of jeans to the right of the Like button. By displaying the number of members who Like a pair of jeans, Levi's is betting that consumers will be more influenced to look at and buy those jeans.
During an internal usability study we conducted in May of 2010 with online shoppers across various age groups who had Facebook accounts, we discovered that the Like feature did influence members' shopping experience. We observed that jeans with a higher number of Likes got more views from these online shoppers than jeans with fewer Likes, at least initially. While test subjects said they would ultimately select a pair of jeans based on their personal style, they also spent time investigating the products with more Likes to find out why they were more popular.
In order to use this feature, Facebook members must allow Levi's to use some of their Facebook information, such as:
- Their friends' birthdays,
- The display of their friends' Facebook profile pictures on the Levi's web site if they Like a product, and
- Information posted on their Facebook Wall when they select to Like and/or comment on something. (This information would also appear in Facebook's News Feed information for their friends to see.)
By having access to this account information, Levi's can alert its online shoppers about friends' birthdays as a means to promote gift purchases. And in hopes of influencing a shopper's buying decision, it can also show shoppers images of their friends who have Liked or commented on certain products. This is where the true power of marketing through social media shines.
And when viewing a friend's Facebook page or status update in News Feed, members can see if a friend has Liked or commented on something through the Levi's web site. At the top of the next page is an example screenshot of what would typically appear on a fan's Facebook Wall if he had Liked and commented on a Levi's product.
During our study, testers enjoyed seeing a product on their Facebook Profile pages when they commented on a Liked product, as well as seeing a product they simply Liked. These same consumers also said that if they saw a pair of jeans that a Facebook friend Liked or commented on, they would be more inclined to click on that product, driving them back to the Levi's site.
Think about that. Consumers who may have never considered visiting the Levi's web site are now exposed to and driven to the site via a single product they saw on a friend's Facebook profile page or within the Facebook News Feed. If only 0.25% of Facebook's 600 million friends visited the Levi's site, that would still amount to an additional 1.5 million visits.
So what's the downside? That depends on what a consumer is comfortable with people knowing about her. In the case of Levi's, the one drawback we heard from testers was that they may not necessarily want to display the types of clothes they Liked for fear of criticism. The main deterrents when it came to announcing their clothing styles were body type and size, color and style.
However, our test subjects said they would be more inclined to display their Likes when it came to the following product types:
- Electronics (i.e., TVs, digital cameras, video games, etc.)
- Accessories (i.e., purses, jewelry, sunglasses, etc.)
- Special offers and coupons
Enter Amazon.com. In late July 2010, Amazon partnered with Facebook to create a personalized shopping experience for consumers based on their Facebook Likes and their friends' Likes. Amazon accesses a customer's Facebook account, with the customer's permission, to gather information as noted in the following "Request for Permission" (below, top image).
Once a customer has allowed Amazon to access this information, the retailer uses it to recommend products based on the customer's Likes and her friends' Likes. Aside from displaying the friends' profile pictures for products they've Liked, Amazon also shows friends with upcoming birthdays. Based on their Likes, Amazon provides gift suggestions for these friends. Below (bottom image) is a screenshot of what Amazon presents as "Your Amazon Facebook Page."
This type of integration allows Amazon to gain key insights into how product sales relate to social recommendationsÑa metric which, up to this point, has not been easily measured. Based on this data retailers can build models to show how financially valuable it is to have members Like a product or brand and truly gauge the impact of social network marketing.