Just as we began to think Facebook was beginning its descent from power, judging by its rapidly declining stock since its IPO, Mark Zuckerberg finds it salvation in Pinterest’s business model. Early last week, Facebook rolled out its testing phase of a new feature called “Collections.” Collections allows users to collect products and items into “Wishlists” on their own Facebook page, which can then be viewed and shared with other Facebook users. While this new feature is clearly based off Pinterest’s likeness, the general internet buzz is that Facebook won’t be putting Pinterest out of the business anytime soon. However, it is widely known that Facebook has been under pressure to monetize its flourishing user base, so this may be the start of that process.
WHY DID FACEBOOK CREATE THIS NEW FEATURE?
As previously mentioned, Facebook’s stock has been plunging downward since it was made public in May 2012 and Zuckerberg’s team has been criticized for its inability to monetize the largest fan base of any social network. By launching this new feature, Facebook can prove its value as an advertising platform to retailers in hopes that retailers will turn to Facebook more often as a revenue-driving resource. Until now, businesses and SEO agencies have found measuring organic ROI from social media channels almost impossible from a monetary standpoint. By creating this free advertising opportunity for retailers to showcase their products, retailers can utilize their fan base to generate demand for their products which will ultimately translate into more purchases. Not only will retailers be able to use their current fan base to advertise their products, but the new “Collections” feature will also help retailers build a larger fan base through “Likes” on their business page. We can get really complicated and say that the increased buzz on Facebook may even help increase retailers’ search engine rankings on search engines such as Bing, who have been said to have incorporated social signals into their search algorithm. But, I digress.
HOW DOES THE COLLECTIONS FEATURE WORK?
Similar to Pinterest, users collect products into “Wishlists” that appear on their Facebook Timeline. Users find these products not through a search query, but through visiting friend’s profiles or by browsing through retailers’ Collections pages. The fact that users are browsing items recommended by “friends” helps the social context of this feature’s success and will hopefully give retailers higher credibility. The Collections albums will also appear in users’ Newsfeed for retailers that they have “Liked.”
Currently, Facebook is testing this feature with the following retailers: Pottery Barn, Wayfair.com, Victoria’s Secret, Michael Kors, Neiman Marcus, Smith Optics, and Fab.com. So, we’ll look forward to the data they gather. For now, Collections is free and available for any retailers to use, but Forbes speculates that Facebook may “use this feature to direct ads based on user interest and, in the process, charge a higher amount for these targeted ad” in the future. While the success of this feature as an e-commerce tool is still unknown, there are a lot of factors that will lend to its longevity ranging from a large fan base to the simplicity of purchasing wanted items.
HOW DOES COLLECTIONS COMPARE TO PINTEREST?
We keep mentioning Collections’ obvious counterpart, Pinterest, but how do they compare? For those who are unfamiliar with Pinterest, it’s a social pinboard site that recently became wildly popular… especially amongst women since it’s essentially social scrapbooking. Pinterest users find and share images that interest them and “pin” them to their variously-themed boards. “Pinners,” as Pinterest users are fondly called, share everything from recipes to outfits ideas, how-to hair tutorials, inspirational quotes, and products they love. While Facebook is certainly following the same concept, they are distinctly trying to engage businesses more and want “Collections” to result in advertising revenue. Nevertheless, the process users are taken through when “collecting” a product is eerily similar to Pinterest. A user is asked to add their product to a Collection, which is comparable to Pinterest’s boards in that Facebook has pre-populated Collections, such as “For the Home,” or users can create a new theme for a Collection. Users are also prompted to explain why they’re collecting an item which, while it is a direct copy of Pinterest, it can also be useful for retailers to gather data on why certain products are more popular than others.
Finally, some differences between the two processes are that Facebook users are allowed to change preferences on who can see their saved Collections on their Timeline and users can directly buy the products they see by clicking the direct link to the retail website. Having the ability to hide saved Collections is certainly nice (and legal) for privacy issues, but it also seems to defeat the purpose of free product advertisement for retailers. And, Pinterest does have the capability to link to direct sources, but not all pins are from retailers so users don’t always have product information to buy items they like.
Taking a cue from the overwhelming fan response of Pinterest, Facebook is trying to forge its own way in the e-commerce sector of social networking. And, while Facebook clearly didn’t put any effort into creating an original path for this endeavor, the Collections feature may prove to be very helpful and lucrative for retailers and businesses. While Collections remains free for retailers to use, it would be highly advisable that businesses take advantage of this advertising opportunity to not only drive up product purchases, but also to grow their Facebook fanbase and drive traffic to their website. And, for me, I’ll be eagerly waiting for Facebook to release their data from the seven test retailers to learn what Collections real value is for both marketers and retailers.