New York — In a surprising move to attract more marketers to buy up advertising space, for making its online cash registers ring, popular social networking giant Facebook, over the weekend initiated rolling out a new tool which will allow online retailers to track purchases by members of the social network who have viewed their ads.
More importantly, Facebook has made it clear that it is exploring ways to persuade its brand advertisers that they can make money off of the site. Hence, the tool is the latest among the new advertising features the social media hub is offering to convince marketers that steering advertising dollars to the company will deliver a payoff.
The initiative follows some unpleasant incident such as, General Motors pulled its ads off of the social network just days before its IPO because of how ineffective they were. If Facebook can’t start convincing big brands that it worth spending money to advertise on the site, the social network will be in big financial trouble.
Facebook, with approximately 1 billion users, has encountered a tough reception on Wall Street amid concerns about its slackening revenue growth.
“Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers,” said David Baser, a product manager for Facebook’s ads business who said the “conversion measurement” tool has been a top customer request for a long time.
As a matter of fact, Facebook plans to do this with a tool, which expands its Optimized CPM (cost per thousand impressions) bidding program. The Optimized CPM service allows an advertiser to prioritize its marketing goals. Facebook automatically delivers ads against those goals in the most effective way possible, allowing the advertisers to maximize the value they get from their budgets.
Going forward, Facebook will now permit retailers to track how many sales were translated from ads on the social network with two new additions to the service, Facebook told InsideFacebook.
On the other hand, the sales information that advertisers receive remains anonymous, said Baser. “You would only be able to see the number of people who bought shoes,” he said, using the example of an online shoe retailer. But marketers would not be able to get information that could identify the people, he added.
On the brighter side, the conversion tool is particularly designed for so-called direct response marketers, such as online retailers and travel websites that advertise with the goal of drumming up immediate sales rather than for longer-term brand-building.
In fact, this obviously works in both directions, as it allows businesses to see if they are making a return on the advertising money they spend at Facebook. And if they are, then it encourages them to advertise with Facebook in the future and could even pull advertising money in from other businesses. That, obviously, would be a good thing for Facebook, so you can bet the company is hoping for results that show the ads are working.
Apart from countless cool features, marketers are allowed to add snippets of code on their website, which will allow them to measure conversions. They can also select the Optimized CPM bidding, which will allow Facebook to show ads to those that are most likely to convert into sales, lowering the markets cost per acquisition.
According to social media Facebook’s definition, a conversion as anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter. The service has been tested by a number of retailers, including Fab.com, which saw its cost per new customer acquisition go down by 39% as a result.
However, this new sales tracking tool is currently being tested, so it is not available to all retailers yet, but Facebook informed Reuters that everything should be fully enforced by the end of the month. Just in time for the holiday sales rush, which we are guessing is not a coincidence.