The e-retailer spends at least 50% of its monthly display ad budget on the highly targeted, data-driven—and often cheap—ad placements using programmatic platforms.
Retailers with active fan bases could come out ahead.
Facebook Inc. today launched a limited test of the Search Graph, a new search engine for the social network that it says will provide personalized search results that focus on people, photos, places and interests. The tool enables consumers to ask questions such as, “What jewelry pages do my friends like?”
Consumers will type their queries into a large search box near the top of a Facebook page, and get results quite different from what they would get from Google or Bing, the social network says. "In web search it is very often the case that if you do a search for 'apple' and I do a search for 'apple,' we’re basically going to get the same results," says Kari Lee, engineering manager, in a video Facebook released today. "Maybe I’ll get slightly more technical results based on Apple computers and maybe you’ll care about the fruit a little bit more but [the results] are not that different from each other. Whereas on Facebook when you do the same searches we'll get completely different sets of results because of the depth of personalization that we do."
That personalization is based on the Facebook user's connections with people, places, and things. For example, if a user searches for restaurants in a particular city, those that are most popular with his closest friends are likely to be displayed first. Results that are similar to the searcher’s existing Likes and interests may also be ranked higher.
Only objects shared on Facebook will appear as a result in the search bar. However, if there aren't relevent results, Facebook may also offer suggestions in the search bar that trigger web searches powered by Bing.
The product’s results are also limited by consumers’ privacy settings. For example, if a consumer doesn’t publicly share the bricks-and-mortar stores or restaurants he has visited on the social network that information won’t appear in results.
That puts the onus on retailers and other businesses to get consumers to share more information on Facebook, because the more active a retailer’s fan base is—and the bigger that fan base is—the more likely it is the brand’s page will appear in consumers’ search results, says Andreas Pouros, chief operating officer at London-based digital marketing agency Greenlight.
“While Facebook has been reducing the prominence of businesses’ posts in the past year, this may offset that, which should be good,” Pouros says. Pouros refers to Facebook’s practice of showing a consumer only about 16% of the content that her connections—including retailers she's Liked—post on the social network, because Facebook selects what it believes are the most relevant posts to display in the "Top Stories" section of the individual's news feed.
With the launch retailers should optimize their Facebook presences for search, says Rebecca Lieb, digital advertising analyst at research and advisory firm Altimeter Group. For instance, multichannel retailers should create local pages so that if a consumer searches, "What pizza do my friends like in Dubuque?" the Domino's location in Dubuque, IA, shows up.
"It is just like search engine optimization," she says. "Retailers have to get their house in order. They have to do basic SEO practices like making sure their photos are properly tagged so that the data is findable."
Facebook today did not launch any new advertising products with the Search Graph. Facebook offers one search-related ad unit, Sponsored Results, which enables marketers to pay to have their listings appear high up in search results. That ad format will continue to appear regardless of whether consumers are part of the Search Graph test, says a Facebook spokeswoman.
Many analysts expect more ad units to come. “Before the arrival of Facebook's Search Graph the search function on Facebook was basic and, as such, a wasted opportunity given Facebook’s imperative to strengthen advertising revenues,” says Eden Zoller, principal analyst at international research firm Ovum. “Facebook Graph Search will no doubt leverage member data to provide advertisers with more targeted, personalized advertising opportunities going forward.”
That’s a natural direction for Facebook to go to make its site more useful, says analyst Colin Sebastian at Baird Equity Research. “Obviously the process of searching an enormous amount of unstructured user data isn't easy, but search is a core part of any web platform,” he says. “Improved search should help Facebook monetize user traffic more effectively.”