DIGITAL AGILITY BLOG:

The Real Motivation behind Facebook’s Gifts

Xynergy

Social media is enormously popular all around the world. The companies behind these free social sharing sites are beginning to find new ways to monetize their popularity. Social media giants have invaded everyday life and social networks have become sources of information and commentary on live events. Social media has had its place in this year’s biggest news events - whether it be a celebrity tweet or a heartfelt post about the Sandy Hook shooting - social media can control how we respond to current events.

What is Gifts?

People are constantly connected to technology and in 2012 shopping sites began to build communities around retail using social media. Introduced in 2012, Facebook Gifts took social media advertising to a new level. Gifts is a gifting service to send real products to your friends through Facebook that could potentially become a one billion dollar business.

Facebook Wants Information To Tailor Ads for You

In 2012 the majority of Facebook’s revenue came from advertisements, which does not look great for the companies IPO. Facebook gifts will help diversify Facebook’s sources of revenue. But what is the real reason for Facebook getting involved in the E-commerce business when they are already selling products through ads? Their motive is actually quite devious. Gifts is a step towards their goal of having the most targeted ads on the internet. When you send a gift to your friend, Facebook gains information about both of you. Now they can more carefully target ads at your friend and while you shop on Facebook they have your attention longer to show you more ads. Here is an example of how this targeting works: if you sent your friend a cookbook for their birthday they may now see targeted cooking related ads when they browse Facebook.

Mobile Device Shopping

With many of users’ credit cards on file, having been saved from when they purchased mini games, users’ will not be dissuaded by having to enter credit card information when they make purchases through Gifts on mobile devices. If Gifts is successful, Facebook will be simultaneously gaining more information about users, advertising for their retail partners, and making at least some profit all in a seamless, considerate, and non-intrusive way.

http://news.cnet.com/8301-1023_3-57552065-93/facebook-gifts-important-but-not-about-the-money-just-yet/

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