Facebook is continuing to tune its advertising options in advance of its highly anticipated initial public offering (IPO). The company has repeatedly made major changes to its ad services over the last year. In the last two months, Facebook has expanded the beta test of self-service Offers platform to a small number of international brands and most recently, local businesses. Now Facebook is expanding Offers to web-based companies.
More and More Offers
It’s no secret that advertising is how Facebook makes money. The millions of users of the free service are not its customers: they are the company’s very valuable product. Now that Facebook is inching closer to its IPO, it has become especially important that the company show investors it will be able to compete with companies like Microsoft, Google and Yahoo and win digital marketing dollars.
In October, Facebook majorly revamped its ad services introducing several new options like Page Post Ads that allowed advertisers to use any post as a Facebook ad and display it to any user (even non-fans). Then in February, the company rolled out Facebook Offers, which allowed companies to create deals and distribute them in user’s news feeds or via sponsored stories.
Initially Facebook limited Offers to a few major brands, but has expanded to beta to local businesses and a small number of companies in New Zealand, Singapore, Australia, Japan and Turkey in the last few months.
Now Facebook is ready to extend its Offers platform to e-businesses. Including web-based brands without physical locations could result in a substantial boost in Offer advertisers. Many of the sites most popular business pages don’t have physical locations. Offers will likely be more attractive than traditional ads because advertisers will be able to tie revenue/sales directly to advertising investment.
What This Means
Facebook has not been publicizing Offers heavily. The company may be waiting to “get the kinks worked out” before making a big advertising push.
The continued expansion of Offers may negatively impact daily deal service like Groupon. Facebook only charges advertisers for distributing the ad and doesn’t take a percentage of the revenue that promotions generate. Stories are already beginning to emerge about the impact of Offers. As with other deal advertising, some businesses are receiving much more attention than they expected from Offers promotions as users share deals with their networks.