Facebook is no Googloid money-making machine, at least not when it comes to online retailing, according to a new study from the market-analysis firm Forrester Research.
The report looks at how retailers have used Facebook pages and the Open Graph protocol. It concludes that Facebook doesn't drive sales for most retailers and that Facebook's tools for businesses are no Google AdWords.
"While pockets of opportunity for Facebook do exist, the likelihood that Facebook will ever be 'the next Google,' thereby becoming a key sales-driving tool for retailers and creating a reliable revenue stream for Facebook, is unfortunately far-fetched," the report concludes. "In contrast, paid search was viewed as a home run in Google’s early days.
"On average, Facebook stores generate less than 1 percent of e-commerce revenue for retailers with robust web businesses," the report continued.
Instead, most of the 102 retailers that Forrester polled were finding leads and new customers through search ads, affiliate programs, organic search and mailing lists. Only 7 percent of those companies ranked "social network presence" among their top three sources of new customers.
Sucharita Mulpuru, the report's author, did find some pockets of hope for both Facebook and online stores investing heavily in social media efforts:
- Very small businesses reliant on word-of-mouth had some success on Facebook.
- Social games such as Zynga's Farmville are doing well.
- Companies selling expensive consumer tech items, books and movies find that people do trust recommendations from their friends on Facebook.
But as for selling a lot with Facebook pages using Facebook credits? Forrester is skeptical, citing privacy issues and retailer's wariness of using Facebook's payment system.
"Facebook is not a search engine," Mulpuru writes. "Shoppers go to sites where they can easily find what they are looking for. Facebook, however, is a directory and a communication tool and, as a result, a place where relatively few shoppers engage with brands."
As for Facebook pages being good places for building brand awareness, Forrester found that many retailers are seeing that the posts from users tend more towards criticism rather than praise, and that the users who do show up are just looking for bargains and coupons.
The survey did not, however, look into how useful Facebook is as a customer-service tool. Nor did it look into the efficacy of Facebook ads, which can be shown to targeted audiences with fine-grained demographic settings -- unlike paid search ads, which have only some very basic targeting choices.
But the analysis is clear: So far at least, social and shopping aren't the dynamic duo that many, including Facebook, had hoped.
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