Mounting Evidence Shows Potential of Social Ecommerce, Contradicting Recent Reports
A new report by Forrester Research and another by the World Federation of Advertisers and research firm Millward Brown proclaim that Facebook will not play a signficant role in the future of ecommerce.
Context & Ripple Effects
Skepticism about Facebook's ability to make money is a running thread in this corpus: a 2007 backlash piece asked what happens if the company simply cannot sell ads, and by late 2008 paidContent was already digging into projected ad-sales slumps at MySpace and Facebook. The monetization question has never really gone away — it has just changed form.
In December 2010 Business Week reported Facebook's big push into e-commerce, positioning transactions rather than display ads as the next revenue layer. The April 2011 reports from Forrester Research and from the World Federation of Advertisers with Millward Brown directly challenge that thesis, concluding Facebook will not be significant to ecommerce's future — and Inside Facebook is pushing back, arguing mounting evidence points the other way. With no syndicated pickup or visible public reaction recorded, the dispute is so far a fight between the platform's advocates and the research establishment over whose read of merchant behavior is right.
First-order effects
- Retailers weighing Facebook storefronts face contradictory guidance at exactly the moment they are budgeting: Forrester and the WFA/Millward Brown tell them social channels will not move product, while Facebook's commerce drive tells them to build there now.
Second-order effects
- Facebook has a direct incentive to surface transaction and conversion proof that rebuts the analysts, since the WFA/Millward Brown finding is aimed at advertisers whose spend decisions the reports are designed to shape; the research firms' framing becomes a variable in Facebook's ad-pricing conversations.
Third-order effects
- If the pattern holds, social platforms' commercial value will keep being adjudicated by measurement firms before the tooling for tracking social-driven purchases matures — meaning 'social ecommerce' may be settled less by storefront volume than by whoever controls the attribution standard.
The trend: Analyst verdicts on whether social networks can carry commercial transactions are oscillating ahead of the measurement tools needed to settle the question, with Facebook pushing from advertising into commerce against a skeptical research consensus.