What’s the hottest new digital toy?
If you’re Facebook and Twitter, it’s the buy button. To recap: Facebook published a blog post explaining its experimentation with a buy button – currently with select small and medium-sized businesses – with which users can purchase goods directly through the Facebook platform.
This announcement followed Twitter’s own dalliance with ecommerce. In July it released – likely by mistake – a semifunctional buy button designed to enable purchases directly from an online retailer called Fancy. It also performed tests with Amazon in which customers could respond to tweets featuring products with #AmazonCart in order to add those products directly to a shopping cart.
This isn’t the first time advertising and ecommerce have come together. Google has its product listing ads (PLAs), though, as many sources point out, these ads differ in that they feed off search data and the consumers clicking on them are typically looking for the products they advertise.
Facebook has experimented with ecommerce in the past, trying to position itself as a shopping platform. It didn’t catch on.
“I don’t penalize Facebook for trying,” said Jason Goldberg, VP of strategy at Razorfish. “They released APIs and tools that could build applications that live on the Facebook platform.”
But Facebook at the time was comparatively immature, which led to constant changes in the platform. “Man, it’s not fun if you’re trying to live on that process while it’s happening,” Goldberg said. But times have changed since then. Not only have both Facebook and Twitter matured as platforms, but consumers have become more mobile.
“Right now, so much social media activity is on mobile,” said Brittany Richter, supervisor and New York regional lead focusing on paid social at iProspect.
This is one reason, she pointed out, why Facebook and Twitter are experimenting with handling ecommerce transactions directly on their respective social media platforms. In doing so, consumers are assured a streamlined purchasing experience and don’t run the risk of crash landing onto a retailer’s non-mobile-optimized site.
“Facebook’s attempt this time is so much better than it was last time, when it was more Craigslisty,” Richter said. “And as social media becomes a pay-to-play space, the benefit is that the platforms become more sophisticated with targeting.”
And that’s another possible reason why Facebook and Twitter are doing more than simply sending prospect traffic to a retailer’s site: They will have the direct access to consumer purchase data that neither had before.
“Where it gets interesting is when you start to have purchase data and behavior data together,” said Chris Copeland, CEO of GroupM Next. “Using historical data, commerce data, credit data as well as your behavior to give you things more relevant to your patterns.” He described a scenario in which a consumer who habitually orders pizza once every two weeks might see advertisements from Dominos or Pizza Hut on the days he’s most likely to buy.
A situation like this is the end game, Copeland said, adding: “To start out, it’s going to be a very immediate play to get the consumer to bite.”
In other words, Twitter and Facebook are going to need consumers to buy in to the buy button. Besides building enough goodwill so consumers feel comfortable inputting their credit card numbers – a particular challenge for Facebook, afflicted with consumer trust issues – social networks that double as buying forums will also need to change the reason people visit them in the first place.
“It’s the digital analogy to somebody trying to sell me a bunch of goods when I’m in a bar with my friends,” Goldberg said. Right now, social media buying isn’t a mainstream activity and perhaps, he points out, it’s simply a matter of Twitter and Facebook sticking with their ecommerce platforms long enough for consumers to acclimate.
“In China, digital shopping and media emerged simultaneously,” Goldberg said. “In and of itself, that could explain why social commerce is more adapted in Asia vs. the US.”
Alan Yan, CEO of AdChina, pointed out the partnership Chinese social network Weibo formed with ecommerce giant Alibaba months before the latter’s IPO. “That’s quite clear move for ecommerce players like Alibaba Group to get on social platforms,” he said.
But why is social commerce a much bigger phenomenon in China than in the United States? Yan said he believes it’s because word-of-mouth is particularly important when Chinese consumers are make purchasing decisions.
“In the US, my opinion is that people have very independent thoughts on what they’re going to buy and what they need and don’t need,” he said. “In the Chinese market, they don’t have time to study whether this [product] is right for me. They’d rather listen to friends or family members or their colleagues.”
Of course, studies have shown word-of-mouth is a key influencer of purchasing decisions in the US as well. And that isn’t to say that word-of-mouth and research are mutually exclusive. In Copeland’s experience, they’re complementary: “The most powerful component of Facebook is your constituency and friend network reviews, which we have historically found leads you to do more research.”
Perhaps Facebook’s initial problems with ecommerce stemmed from the fact that it asked members to use the platform in an unfamiliar way – as a shopping venue. Both Facebook’s and Twitter’s buy buttons are designed to integrate ecommerce without disrupting the familiar social media experience.
“This buy button is less about creating an advertising unit and it’s more about integrating [ecommerce] in a really native way,” said Emma Cockburn, search director at Neo@Ogilvy. Facebook COO Sheryl Sandberg, during the company’s Q2 earnings call, stressed the way in which the buy button “streamlines the process of buying from our clients.”
And at the Cannes Lion festival, Twitter CEO Dick Costolo also stressed integrating commerce with the native experience: “Instead of putting traditional ecommerce on Twitter, it’ll be about the kind of commerce that wasn’t available previously, that makes sense in the context of what I’m doing right now and seeing right now.”
But even assuming consumers take to the social media buy button, there’s still another disruption looming on the horizon: the relationship between the social media sites and their retailer partners. After all, if Facebook and Twitter effectively become buying platforms, won’t that cut into the business of the Amazons and Walmarts of the world? Razorfish’s Goldberg points out that retailers are wary of some of the ecommerce features Facebook and Twitter are developing, and he wonders whether they will “cultivate synergistic relations or become a competitive channel.”
And iProspect’s Richter wondered if the buy button could create another rift between brands and the retailers that sell their products. “I work on some global electronics brands, and they have an ecom website and partner closely with Amazon,” she said. “It’s important to support our retailers like Amazon, since we know some consumers will always buy from Amazon. Though of course we’d rather it come directly to us, since we can track it more and don’t have to pay the retailer.”
Facebook at least seems wholly aware of this conflict. During its Q2, Sandberg emphasized that even with a buy button, “I don’t think people should confuse that with Facebook selling things directly.”
