Facebook To Debut Product Ads, Boost To Brands

For better or worse, Facebook is going to start looking a lot more like a product catalog.

On Tuesday, the social network plans to unveil Product Ads — a new format for brands to show off multiple offerings, and in some cases, their entire inventory.

“Businesses can now showcase more products and people on Facebook can discover more relevant products,” a Facebook spokesman said on Tuesday.

To avoid overwhelming users — and improve conversion rates — Facebook says the ads will be highly targeted and customizable.

Leading up to its official launch, Facebook has been testing Product Ads with a number of brand partners, including Target and Shutterfly. For these and other partners, Facebook says it can manually create campaigns targeting particular products to specific audiences, or automatically optimize their campaigns to do essentially the same thing.

Analysts on Tuesday said the new initiative makes good business sense. "Facebook has clearly learned from Google's product listing ads by including automatic product feeds so that retailers can keep ads aligned with real-time inventory," said Yory Wurmser, retail and ecommerce analyst at eMarketer. "With the wide-scale introduction of product ads, Facebook is creating a full menu of direct response advertising for retailers."

Shown in single- or multi-product ad units, offerings can be customized for use throughout the purchase funnel from discovery and awareness to checkout. Brands can also curate their offerings in a number of ways, like highlighting products that were most recently viewed by shoppers, or those products that are already selling well.

Among other options, advertisers can automatically target users who have previously visited their Web site or app, as well as reaching people based on specific interests and geographies.

The new units also work across all digital channels. When used with Facebook’s conversion pixel or SDK, the company says product ads are optimized for each person that sees them.  

In addition, the automated ad system will turn off ads for specific products when they are out of stock.

In tests, brands say the new ad units performed well. Kristi Argyilan, senior vice president at Target, reported that the Product Ads resulted in a 20% increase in conversion compared to other Facebook ads.

If successful, the new offering could challenge Pinterest, and even more traditional ecommerce leaders like Amazon and eBay.

Facebook has steadily been making inroads into ecommerce. With the help of payment start-up Stripe, the social giant recently unveiled a “Buy” button, and expanded its classifieds-style commerce efforts.

Despite its promise, social media has yet to carve out a significant share of the ecommerce market. In fact, social media channels — including Facebook, Twitter, Instagram, and Pinterest — contributed just 1.7% of total e-commerce sales, this year, research firm Custora recently reported.

By comparison, email contributed 27.3% of total online sales, followed by 18.9% originating from free search, and 18.5% from paid-search marketing.

As of Tuesday, Facebook is making its new Product Ads available today in the API through Marketing Partners, and plans to roll it out in Power Editor over the next few weeks.

5 comments about "Facebook To Debut Product Ads, Boost To Brands".
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  1. Chris Smith from ASU, February 17, 2015 at 3:40 p.m.

    Over the past 10 years Facebook has been one of the most popular social network sites. In past research Facebook has seen up over 890 million daily users that use the either the app or login over computers. If you think this is a great deal of users that get on to Facebook just to keep to date with their friends or relatives, over just a 24 hour time period. With high use of users on a daily basis it is good that Facebook is introducing the use of placing ads throughout their site. Facebook will not only join with companies to help boost their companies products, but will also be gaining money from users clicking on different links from the ads. Facebook has already seen a rise in sales when they have placed test ads on their site. I feel like this new ad boost can go either way; it will be good or bad, depending on users. One-way that it will be good is that users will be able to online shop easier and companies will see a rise in online sales too. But, on the other had of things; there could be a negative side of this. One bad way would be that of some users not liking the ads and that when they signed up for this site that they did not want ads to be across their profile. But, overall I feel like this new ad boost will have a positive outcome and both Facebook and companies will see a rise, but also users will enjoy to have an easy one-click thing to online shop.

  2. Le Nguyen from Person and Partners, February 17, 2015 at 5:23 p.m.

    For Google Product Listing ads,there are restrictions for car dealers to post their inventories online. Is there any restriction for car dealer to advertise on for Facebook Product Ads?

  3. Eric Rusiecki from ProRelevant, February 18, 2015 at 9:21 a.m.

    It was only a matter of time before Facebook became completely money driven. I wonder though what the effect of the advertising will be on the companies Social Media & Brand ROI. Advertising on the larges social media network is a must, but how will users respond? Feel annoyed? Interested to see what the click thru rates and sales from the ads will be.

  4. Kevin Horne from Verizon, February 18, 2015 at 12:01 p.m.

    "Target...reported that the Product Ads resulted in a 20% increase in conversion compared to other Facebook ads." Doesn't seem like much for something customized, personalized, real-time, inventory adjusted, cookied-to-the-hilt, etc.... ?

  5. Taylor Enriquez from Arizona State University, February 18, 2015 at 7:51 p.m.

    After reading this article, I must say I am not surprised. Facebook is one of the highest traffic web sources. It is the newest, most used social network since "Myspace". I can understand their reasoning behind having ads displayed on their website, but if it is going to be anything compared to a "catalog" then I don’t see it being much of “Facebook” anymore. I can understand wanting to advertise and make more profits and bring other things to the table to interest people. However, my thinking behind it all is, why turn Facebook into something that it was not originally intended to do. Isn’t Facebook to connect people and to inter mingle and make connections? I can understand articles and other things that might interest people like different pages to follow, but anything beyond that I find to be unnecessary. I feel like you should not be trying to sell things to people when all they are there for is to check in with friends or family. Why clutter the page with unnecessary jargon.

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