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What will Facebook's new product ads mean for marketers?

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25th Feb 2015
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Last week, Facebook announced it will start offering product ads on its site, allowing brands to showcase multiple merchandise items within single adverts on its users’ news feeds. The official announcement went like this:

“Many businesses sell more than one product. But if your business has lots and lots of products to advertise, all that variety can present some challenges. How do you highlight more of your products? How do you advertise the right products to the right people?

“Today we’re introducing product ads, a solution designed to help businesses promote multiple products or their entire product catalog, across all the devices their customers use. With product ads, businesses can showcase more products and people on Facebook can discover more relevant products.”

A number of media outlets called the launch a direct attempt to siphon some of the colossal retail advertising market share Google currently holds through its Shopping Ads (product listing ads (PLAs), which as a business unit is suggested could be worth in the region of an eye-watering $8 billion a year, with retailers having tripled their spend in 2013 and 2014.  

And Martin Dinham, director of marketing agency Barracuda Digital says that, with the launch, Facebook is targeting Google and their ability to deliver ROI for online retailers; but that marketers could have more joy extracting results from a Facebook than via the search engine giant:

“This could be an absolute game changer in the retail marketing space,” he says. “For the first time Facebook is taking full aim at Google and their ability to deliver ROI for e-retailers, in particular through their PLAs, which this product is distinctly similar to.

“There is always going to be debates about the differing consumer mindsets when on Facebook (social) as opposed to Google (hunting), but I believe that the multiplicity of customer data that Facebook has available to it will enable it to target consumers in ways that Google just cannot at present.  Facebook also arguably has a far more mature mobile product than Google and the ability to target a consumer across devices far more accurately than Google.”

So the question is, with such huge potential significance, what are the main benefits of Facebook Products Ads for marketing professionals and retailers, and what are the limitations?

Multi-device advantage

In his highly-regarded blog, author and CEO of Smart Insights, Dave Chaffey says marketers should hone in on five elements outlined in the launch of Facebook Product Ads:

1. Availability: Product ads will not be available in Power Editor for “several weeks”, but are available via partners now, for example via Criteo, who already offer retargeting for retailers where they serve product ads where people have browsed a product or category on their site.

2. Setting up retargeting: Ads are triggered after customers have viewed a product on a website or in a mobile app using the Facebook Custom Audiences advertising pixel as explained in this guide to setting up Dynamic Product Ads.

3. Catalogue uploaded for products to display: Ads are populated by uploading a product catalogue.

4. Ads are then automatically displayed in a standard format: The example ad Facebook gives shows how merchandising like couponing and discounts can be promoted:

5. Cross-platform retargeting possible: A benefit of these ads is that they are cross-device. Facebook say you can reach people with ads on any device they use, regardless of their original touchpoint for your business.

And Lee Hudson, PPC manager of Bring Digital believes it is this multi-device angle Facebook product ads will cover that will give retailers the ability to tie their adverts in with full customer journeys far more succinctly: “The true advantage of Facebook’s new product ads is that we will now be able to target products to specific audiences and customise our ads to appeal to customers at each part of their journey from discovery to purchase.

“The ads will also be optimised dynamically, which means that the user will be served an ad based on their interests. In the old days, the advertiser would have to create specific campaigns for specific audiences, which is a heck of a lot of work. Now, Facebook’s dynamic ads will do the hard work, saving lots of wasted hours and, more importantly, budget.”

Social commerce

Hudson also believes Facebook Product Ads will deliver a better mobile shopping experience than Google is able to offer, due to the proliferation of the social network’s mobile app which is seen as a vital gateway to commerce on the platform. This view is backed up by Gartner’s prediction that by 2017, mobile will account for as much as 50% of all digital commerce transactions.

Social commerce is on the cusp of propagation too, with Shopify stats stating that product research and discovery on social channels drove a 202% increase in ecommerce orders in 2014, and 62% of marketers’ primary goal for 2014 having been to expand their sales revenue through social channels. Yet, despite further stats from Offerpop suggesting that Facebook appears to have the social commerce landscape all but to themselves at present (92% of marketers plan to spend the majority of their social marketing budget on Facebook), Buyapowa’s CEO, Gideon Lask believes the social network will need to do more than change its advertising options to improve path-to-purchase on the site:

"Against a background where the organic social reach of a brand’s posts on Facebook Pages has been reduced to near zero, Facebook’s announcement of the new ‘multi-product’ ad tool significantly increases the options available to social media advertisers...[however] the feature is currently only available to Facebook Marketing Partners via the API, but it is curious that the July 2014 beta launch highlighted the Facebook ‘buy button’ but no mention was made of this last week.”

Retargeting focus

Phillip Smith, UK country manager for Trusted Shops, shares Lask’s concern, predicting that even at its peak, commerce on Facebook is only likely to be for impulsive shopping purchases:

"Consumers like to compare and browse products across multiple stores which means they will need to leave the Facebook application ahead of a purchase to do so. Considering the idea is to keep shoppers on the Facebook app, Product Ads are failing to address the objective.

“Marketers in ecommerce should probably feel obliged to at least trial it, but the return on investment is never going to be breathtaking or even satisfactory. At best it will be a resource for retailers selling impulse buy products.”

And Alexei Lee, head of social and promotion at Strategy Digital agrees with Smith’s prophecy, but suggests that while social commerce is still relatively nascent, marketers are best placed committing small chunks of their advertising budgets to Facebook’s Product Ads to test the waters, as opposed to aiming to create any direct line to revenue through the function.

“Google product ads allow marketers to re-target custom audiences such as website visitors with highly tailored ad creative linked to their previous browsing history. With the launch of product ads, advertisers will now have this ability on Facebook too.

“But until Facebook product ads bed in and we have some more case studies that demonstrate how they are best used, we’d advise marketers to focus on retargeting using custom audiences such as website visitors and email lists. This will mean that you’re more likely to be targeting people further down the path to purchase, as opposed to wasting impressions on those who are not ‘in the market’ to buy.”

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Shonette
By Shonette Laffy
11th Mar 2015 14:41

From Jon Burg:
This is really all about retail, and eRetail in particular. However, I'm not sure that Facebook is going to see a strong lift in purchases with this move. Many companies have tried f-commerce, and the results were generally underwhelming.

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