While the social network isn’t doing away with its direct-sale initiative, it is focusing its attention on ads that drive consumers to retailers’ sites.
The Tagtile buy could lead to greater understanding of consumer shopping behavior.
Facebook has a treasure trove of data on its millions of users—who they are, where they’re located, who they associate with, what they like. Now the leading social network appears to be looking to better understand what consumers buy at a very local level. It has acquired Tagtile, a mobile loyalty company that serves very small businesses.
To use Tagtile, a small business—a local bookstore, for example—installs a small Tagtile cube with location-based services technology at its checkout counter. When a consumer who has downloaded the Tagtile app makes a purchase, she opens the app and taps it against the cube. Sensors in the cube recognize the app and the app’s registered user. The system then logs reward points as determined by the small business. The app also enables the retailer to send special offers to the consumer.
Through Tagtile’s data repository, Facebook can glean information on what consumers are buying, where they’re buying it and how often they buy.
Facebook has more information about people than any company in history, says Lou Kerner, founder of the Social Internet Fund, an asset management firm that specializes in social marketing and mobile commerce.
“It is currently mining that data to provide hyper-targeted advertising,” Kerner says. “But to continue to grow its valuation, Facebook needs to become a major player in e-commerce as well. To achieve that, Facebook needs to better understand what people are buying, both online and in-store. Tagtile not only has a compelling solution for tracking in-store visits and sales, but more importantly, it has a talented staff with deep knowledge of mobile commerce.”
Facebook acknowledges it had its sights set on Tagtile’s staff. “We’re happy to confirm that Tagtile’s founders are joining Facebook, and that Facebook is acquiring substantially all of the company’s assets,” a spokesman for the social network says. “We’ve admired the engineering team’s efforts for some time now and we’re excited to have them join Facebook.”
Tagtile writes in an official company blog post that its business model will soon change as it teams up with Facebook, but it does not elaborate. Facebook declined to comment.
Speaking to its small business clients and app users, Tagtile writes, “We’re excited by what lies ahead for us with Facebook, and are sure you will like what you see next.”
Facebook exposure has helped many brands. Watch a video of David Berkowitz, senior director of emerging media and innovation at 360i, illustrating how Oreo cookies gained a lot of free exposure simply by picking an Oreo Fan of the Week from among the photos that consumers uploaded to Oreo’s Facebook page.