Square Merchants Can Now Buy Ads On Facebook – A Smart Move, But Challenges Remain

SquareFacebookMom-and-pop shops can now buy and target their Facebook ads through Square as part of a deeper integration between the two partners.

The move, announced Wednesday, makes a heck of a lot of sense.

Small business owners that use Square can already automatically share their promotions on Facebook. Now they’ll be able to combine their sales data with Facebook advertising to get a better idea of how the ads are performing and what impact they’re having on in-store traffic.

In a blog post, Square noted that it will also be adding support for other social channels in the coming weeks.

The small-business space is a tough nut to crack, even for a company like Square whose main value proposition revolves around SMB services. If a small business spends $10 on Facebook, for example, and makes $200 or $300, that’s relevant ROI, but it’s going to take a lot of transactions to impact the bottom line of a business as big as Facebook or Square.

“It’s a volume game for sure,” said Greg Sterling, VP of strategy and insights at the Local Search Association. “As with anything to do with small businesses, it’s a block-by-block battle to acquire new customers and move them up the value chain. It’s very challenging.”

Square, known for its point-of-sale technology, recently started expanding into the marketing space with a suite of customer engagement tools to help small business owners bridge the gap between online and offline.

“We have payments at our core, but we’re also looking to provide a well-rounded toolkit that helps SMBs drive their business forward,” Kevin Burke, Square’s head of marketing, previously told AdExchanger.

Social media is a huge part of that.

“Local businesses tend to focus on three or four different marketing channels above all others – their own website, which they fetishize, social media, email and search engine marketing,” Sterling said. “Facebook is already there at the top of the list. It’s not a question of if a small business should be on Facebook – they know what the value is – it’s about getting those people to go from free users to advertisers.”

SMBs have become a big focus for Facebook. At the beginning of March, Facebook boasted that it has around 3 million businesses that actively advertise on Facebook. That’s just a fraction of the more than 50 million small businesses that use free Facebook pages.

“We see a big opportunity to continue to grow the number of Facebook advertisers going forward,” Facebook COO Sheryl Sandberg told investors on the company’s Q4 2015 earnings call.

The partnership with Square is clearly an effort in that direction.

“Facebook’s task is the migration of more of those people from free to paid, which they’re forcing by throttling the organic reach of the news feed,” Sterling said. “Facebook would never characterize it that way – they’d of course say it’s all about the customer experience, and to some extent that’s true – but this is also about compelling people to buy ads.”

In that regard, Square’s integration with Facebook is not all that different from Facebook’s relationship with other technology providers like retargeting platform AdRoll and email provider Constant Contact.

“This is a way for Facebook to reach deeper into the market with partners to help accelerate the adoption of Facebook advertising,” Sterling said.

It’s also a way for Square to prove its stickiness to investors now that it’s a public company.

“Square’s stock hasn’t been performing up to expectations, and becoming a marketing platform – becoming more than simply a payment provider, which could be perceived as a commodity service – is another argument for Wall Street,” Sterling said. “Square can say, ‘We’re not just a credit card processor, we’re a platform that helps increase loyalty and lifetime value with additional services beyond our core functionality.’”

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