THE BLOG

Facebook for Retail Marketing: 3 Common Misperceptions

12/12/2012 09:03 am ET | Updated Feb 11, 2013

There is a growing and unwarranted sense of injustice among retail marketers today when it comes to Facebook. Few are able to cost-justify the millions it took to build and maintain their social presence but their effectiveness is being limited by three common misperceptions.

Misperception #1: Brands Own Their Fans

At the heart of the upset is the belief that brands own their Facebook connections. They gathered a crowd of millions into one room through paid ads, contests and promotions, and now they expect everybody to be within earshot of their messages. But as Mark Cuban correctly points out, the EdgeRank algorithm limits their reach.

The problem is, Facebook never promised 100 percent reach, not even in the early days. There's no landlord shakedown. Recency and frequency were always distributed so the signal-to-noise relevance ratio could be high.

In fact, what Cuban and most marketers are hoping for -- the ability to establish a direct connection with fans and own the data--has been possible for years. They just aren't doing it because they view Facebook as a walled garden.

Misperception #2: Facebook Is A Walled Garden

It isn't. In 2007 Facebook launched Facebook Platform and gave user-authenticated access to their data to developers worldwide, evolving since then to support integration across the web. The Graph API enables marketers to capture email addresses and 59 other permissions including likes, interests and friends lists.

Which retailers are using this to bridge fan connections and data over to their CRM or loyalty databases? Very few. Social sign-in and autofill registration forms are becoming more prevalent but for such a data-loving industry, this information typically isn't fully captured or used.

Analytics technology companies are starting to capitalize on these opportunities by building social recommendation engines -- the same technology popularized by Amazon for books or Netflix for movies but with social data as the input and social gift guides as the output. They allow brands to directly reach Facebook fans anywhere with relevant, personalized content instead of mass messages. And they promise to cause more revenue-generating action than even the most entertaining mass content inside Facebook.

Misperception #3: Great Content Drives Revenue

When people are socializing with friends in a bar they may be in a hot buying state for a drink but for any other purchase -- clothes, books and electronics, for example -- they're cold. Hitting them at that moment with a mass brand message about your new clothing line might build brand equity but it won't cause immediate action.

This was the core of GM's argument against the $30 million they spent on Facebook-specific content creation and $10 million on ads. But cold and hot states apply in Facebook too. Facebook's paid ads and sponsored stories are great for driving preference, loyalty, and retention but immediate action from a mass blast is unlikely.

Is it possible to move people from cold to hot states inside Facebook? Once they auth-in, yes. People in a cold state can be influenced with the right personalized message if it amplifies the principles of homophily, contagion or influence. And this is what marketing scientists know best.

Facebook represents far more to retailers than just a room full of distracted fans. With the right technology and execution it can become a rich source of direct, revenue-generating connections.

Disclosure: the author is CEO of Authintic, an analytics technology company building social recommendation engines for marketers.