Friday, September 21, 2012

Facebook to charge brands for Offers

Image representing Facebook as depicted in Cru...
Image via CrunchBase

The famed economist Milton Friedman once explained that there's no such thing as a free lunch. But for brand marketers using social media to reach consumers, it seemed like Friedman's rule was a thing of the past.
That's because many of the world's most popular social platforms offered a plethora of marketing tools for the princely sum of, well, nothing.
But the most popular social networks are in the business of making money, and for the largest, Facebook, making money is an even bigger focus thanks to Wall Street investors who have punished the company's stock since it went public earlier this year.
Evidence of Facebook's efforts to make money are not hard to find. This week, for instance, it announced a trial involving the use of its data for ad networks. And now Reuters is reporting that the company will soon start charging marketers for the use of its Offers feature.
According to Reuters' Alistair Barr and Alexei Oreskovic, "in coming weeks Facebook will require merchants to pay at least $5 on related ads to promote each Facebook Offer to a targeted audience of fans and friends of fans. The cost will vary based on the size of a company's Facebook pages."
Facebook executive Gokul Rajaram believes the new requirement will boost returns for brands making use of Offers. "The best results on Facebook Offers will come from organic distribution plus paid distribution," he stated.

No more free lunch: good for brands?

Rajaram's claim that organic distribution and paid distribution is more potent than organic distribution alone brands will want to confirm for themselves, but Facebook's monetization push could actually be beneficial for brands for another reason.
Right now, many brands are investing the greatest sums into the management of their Facebook Pages. When GM had its falling out with Facebook, for instance, it was revealed that the automaker was only spending $10m on paid Facebook ads but triple that on soft costs associated with its Facebook presence.
With Facebook now charging for Offers, brands which have been using Offers have a greater incentive to assess whether or not Offers are a productive (read: profitable) part of their Facebook strategy. This is something many of them were far less likely to do when no hard costs were associated with Offers.
And if more parts of the marketing toolkit Facebook provides to brands become paid in some fashion, brands will have a real opportunity to start thinking about their Facebook initiatives in ways that won't leave as much room for confusion, doubt and delusion. Whether that's good news for Facebook will depend, of course, on the ROI it can deliver.
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