Jon Thomas
Jon Thomas
Communications Director

Forrester: Facebook is Worthless as an eCommerce Platform

Facebook is WorthlessThe interwebs were abuzz this past week over a newly released Forrester study that paints a grim picture of Facebook’s potential as an eCommerce platform. According to Research Analyst Sucharita Mulpuru, eBusiness professionals in retail collectively report little direct or indirect benefit from Facebook, and social networks overall trail far behind other customer acquisition and retention tactics such as paid search and email in generating a return on investment. Wait, how can this be?

Some outlets have even taken this a step further, venturing to say things like “nobody actually likes your brand’s stupid Facebook page.” In a world where on any given day one could find a story about the incredible growth of Facebook and its impending world domination, a report that takes a big hack at the knees of Facebook had many people wondering what it really meant for the social media behemoth.

The sky is falling! Get off your social networks and call your local billboard company! And what did I do with those pesky yellow pages?!

Let’s step away from the ledge for a second. eCommerce is just one aspect of business, and if you asked me why a retail brand should be on Facebook, eCommerce probably wouldn’t be in my top three reasons.

While I’m not arguing this report’s accuracy — though I should say that the study’s “half-dozen” respondents, as reported by WSJ, feels a tad thin to me — it casts a large shadow on what I think is a very small problem. Fine, the ability for retail brands to turn Fans into paying customers online isn’t as effective as email or paid search. But there are a few reasons for that:

FACEBOOK’S FOCUS ISN’T eCOMMERCE
Facebook is still young in its evolutionary cycle. Its ad platform continues to evolve and new features and functionality — some very important to brands — are constantly being added. To think that an accurate presumption on Facebook’s future viability in the eCommerce arena could be made seems short sighted. If they wanted to be a major eCommerce player, one of their legendary 24-hour hack-a-thons with a focus on eCommerce would give them a place at the table.

FACEBOOK ISN’T THE END-ALL-BE-ALL CHANNEL
Let us not forget — the medium isn’t the message. The medium is just the medium. Facebook should be one of many channels in a brand’s marketing mix, nudging the consumer along in their journey. Each of these touchpoints, which could include paid media, word of mouth, mobile technology, geolocation and more, helps the brand tell their story, one step at a time. For some retail brands, Facebook may not fall at the end of this journey, but that doesn’t mean it’s not useful. Nor does it mean that certain retail brands won’t ever find success in converting fans into eCommerce customers on Facebook…just not today.

FACEBOOK CAN HARNESS THE POWER OF SOCIAL PROOF
What Facebook has that no other channel has is the power of the “Like” — the ability for friends to see what their other friends like, particularly including them in advertisements (though Google has very recently jumped on board with +1).  It’s social proof, and it’s very powerful. We already know that people trust their friends and complete strangers before advertisers, so it’s no surprise Nielsen found that there is a discernible lift in recall, awareness and purchase intent when an ad was seen with social context (your friends like the page/brand).

As Facebook’s Vice president Dan Rose said, “we found that when my friend’s name is in an ad, I’m over 60% more likely to remember the ad, and I’m over four times more likely to purchase the product.” A concerted effort to harness this power and turn it into eCommerce is at least enough of a viable option to keep them in the game. But the bold statement that they’ll never be a player? Flat out wrong.

Facebook is only 7 years old — it’s barely in elementary school! It’s hard to believe that Facebook won’t be an eCommerce player at some point, but even if it’s not, that doesn’t mean all is lost for brands on Facebook. Brands still have a story to tell, and Facebook pages are a great place to share content and engage with consumers on a one-to-one basis.

Do you think these findings are a big deal? What do you think is in store for Facebook’s eCommerce future? Should retail brands focus their marketing dollars and efforts elsewhere? The comments are yours…

  • Anonymous

    Great post, Jon! I read the Forrester thing in a hurry and, frankly, it did raise a lot of questions for me about its own accuracy. Foolishly, I just dismissed it as the ravings of a lunatic. I think you’ve done it more justice with your thoughtful dissection. Agree with you: “It casts a large shadow on what I think is a very small problem.” But it also misperceives the current state of the online ecosystem. Why, for example, did that email turn me into a customer? Because it was the hottest, most persuasive email in my inbox? Or because 23 friends happened to mention the product on Facebook (and liked the fan page) just the other day? I just don’t think Forrester has a clue this time.

  • http://mattrhysdavies.com Matt Rhys-Davies

    I’ve never seen Facebook as being particularly critical in the buying cycle.

    Reviewing products and comparing prices are the crucial elements at play when buying. Friend’s recommendations are important, but ‘Davey Smith likes this’ is not enough information and the ‘like’ doesn’t differentiate between products, businesses, musicians etc.

    Though like you say, it’s still a platform in its infancy. When greater thought is put into how a friend can recommend a product without simply ‘liking it’, then I believe Facebook will hold some significant power as an eCommerce platform.

    Cheers,
    Matt

  • http://www.postadvertising.com Jon Thomas

    Thanks for the comment Matt.

    I definitely think Facebook plays a part in our buying cycle, but as a single touch point of many. I know Forrester was simply trying to express the fact that they believe there won’t ever be a strong correlation between a brand’s Facebook activity and that specific activity producing a sale.

    However, I wouldn’t discredit the power of a friend’s recommendation on Facebook. Social proof can move the customer quite far along their journey. I know I’ve “Liked” a number of brands because some of my friends liked them, and it has specifically led to purchases. That’s just my personal case study.

    Good point about taking a new perspective on recommendations. I wonder if they’ll add any type of functionality for recommendations.

  • http://www.postadvertising.com Jon Thomas

    I wouldn’t doubt the accuracy of the report, because ROI on Facebook eCommerce is still a VERY imperfect science, but to claim that there’s little benefit, direct OR indirect from Facebook, makes me believe that those surveyed simply don’t know what they’re doing. And a sample size of a couple dozen? Could that possibly be enough?

  • Larslennox

    FB was never invented to be an eCommerce Platform. That’s what marketing people want it to be. FB is about exchanging content – not purchasing products.

  • http://www.postadvertising.com Jon Thomas

    I totally agree my friend. I think it’s still so young that neither we nor they know what FB will be when it grows up. I bet if you asked someone in 2007, when it was still just for college kids, if FB was a good place for businesses to set up profiles, I bet they’d say no. But of course, it’s morphed into a massive business tool. So we’ll see, but to say that it’s worthless as an eCommerce platform is short sighted.

  • http://twitter.com/ChrisHanselaar Chris Hanselaar

    Honestly? What is Facebook supposed to generate income with if it isn’t for e-commerce? The low-responsive ads they sell? The games people play? Surely Facebook is here to stay, but an open and honest appreciation of the total commercial potential of Facebook, I haven’t seen that one yet? So yeah. Glad we can share good content through Facebook. But for how long? Not sure…