Facebook recently announced that it will begin placing Product Ads on its users’ news feeds that will allow brands to display multiple items within a single advertisement. Many are calling the Facebook launch a direct effort to take hold of the enormous retail advertising market that Google currently has a stronghold on. Google’s Shopping Ads is a business unit that is estimated to take in $8 billion a year.
With Facebook’s new Product Ads launch, they attempt to deliver a better return on investment for online retailers than Google can offer. The wealth of customer data that Facebook has will allow the company to target their customers better than Google can. Facebook also has a more established mobile product that can effectively target consumers across devices. This is important since mobile transactions are likely to account for as much as half of all digital commerce transactions by 2017.
With Product Ads, businesses populate their advertisements on Facebook by uploading their product catalogs. They can either create their own campaigns, or let Facebook automatically choose which products are most relevant to certain users. Facebook can target people who have visited a company’s website or target people based on factors like location or special interests. This will save time and money for advertisers who will no longer have to create specific campaigns for specific audiences.
The proliferation of social commerce cannot be denied. Shopify stats show that product research and discovery that took place on social channels propelled e-commerce orders to increase by over 200% in 2014. Facebook dominates the social commerce landscape, with over 90% of advertisers planning on spending part of their social marketing budget on the site.
It’s not clear if Facebook’s Product Ads will lead to a tremendous return on investment. Most consumers want to compare products across multiple stores, and they will leave the Facebook application to do so. The Product Ads launch does nothing special to keep shoppers on the Facebook app. Consumers will likely only use Facebook for impulsive shopping purchases, so the Product Ads launch may have the most appeal for retailers who sell impulse-buy products. Businesses will need to test the waters by dedicating a small portion of their advertising budgets to Facebook’s Product Ads and determine ROI vs. other channels in comparative testing but by ensuring they have an attribution model that can track back sales up to 90 days from the impression or click of an ad.