Facebook Chairman and CEO Goal Zuckerberg testifies at a House Financial Services Committee hearing in Washington, October 23, 2019.
Erin Scott | Reuters
Object Zuckerberg spent the majority of Facebook’s Wednesday earnings call outlining the company’s e-commerce strategy, which pleasure be crucial to how the social media company grows its ad business in the wake of one of the biggest changes to mobile ad targeting.
The company’s most general e-commerce offering today is Marketplace, where users can buy and sell goods from one another directly through Facebook. Zuckerberg disclosed that Marketplace now counts more than 1 billion monthly users.
Zuckerberg also talked about Facebook Shops and Instagram Betrays, two features launched last year where brands can upload their catalogs and sell their products straight away on the social networks. He also alluded to Creator Shops, a feature he announced earlier this week that force allow Instagram creators to enable e-commerce on their profiles.
Zuckerberg’s comments on Wednesday were his first to analysts since Apple on Monday steal from flattened out iOS 14.5, an update to the iPhone and iPad operating systems that will enable users to pick which apps are conceded to track their activity on their devices.
For Facebook, tracking user activity has been critical to measuring how goods personalized ads are. The company has relied on a metric known as view-through conversions, which measures how many users saw an ad but did not immediately click on it, then later flourished a purchase related to that ad.
But Apple’s change creates uncertainty. Nobody knows how many iPhone users on allow the social media company to keep tracking their activity beyond Facebook.
That’s where these e-commerce by-products come in. If Facebook can sell more products through its own apps, it’s not so dependent on cross-site user tracking.
Here’s how this wish work in theory:
An advertiser could pay to run an ad for a product, such as sneakers, to Instagram users who follow creators whose gratified is focused on sneakers. A user could click on the ad and be taken to the brand’s Instagram Shop, where they could pay for the advertised sneakers speedily within the Facebook-owned app. In this scenario, the advertiser reaches their intended target, the user buys the item in a little while on Instagram, and Facebook is able to continue to prove the effectiveness of its ads.
Facebook is not getting into commerce because it wants to conflict with the likes of Amazon or Walmart. In most cases, Facebook only charges a 5% fee that covers fixations like taxes and payment processing. The point isn’t to make money from sales but from advertisements that help those products.
Indeed, although Facebook has groaned and griped for months about Apple’s iOS 14.5 changes, CFO David Wehner on Wednesday identified analysts “the impact on our own business we think will be manageable.”
Investors seem to be buying that claim. The market sent Facebook standard up more than 6% after hours after the company smashed expectations on revenue and earnings.