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Facebook Product Ads: What the New Program Means for Retailers

By Tinuiti Team

Feb 23 2015

Facebook Launches New Product Ad Program

With the announcement of Facebook’s new Product Ads, the latest product advertising program could lead to groundbreaking revenue for both the social network and retailers thanks to their advanced user-data and targeting capabilities.

According to Facebook, Product Ads are designed to help businesses promote their entire product catalog across all consumer devices. With Product Ads, retailers have another avenue to promote inventory, while Facebook users can discover more relevant products in a native setting.

From awareness to purchase, advertisers can cater to the user’s journey through a variety of targeting options including:

Dynamic product serving: Automatically serves product ads based off of the retailer’s most relevant inventory. This automatic targeting is based off of user interests, locations and more.
Manual product selections: Manually serve product ads based off a chosen product segment. This targeting option allows the retailer to feature, for example, their best selling items.
Multi-product ads: Enable businesses to showcase three products within a single ad unit, on desktop or mobile. Each product highlighted will have its own image, description and click target. The below image is an example of a multi-product ad on Facebook’s mobile application.

Facebook seeks to acquire ad dollars from Google

It’s no surprise that display-based product advertising has been an increasingly effective revenue-driver for retailers in recent years. According to research from Q4 in Adobe Digital Index, Google advertisers decreased spending on text-based ads by 6 percent and spent 47 percent more on visually engaging Google Shopping ads year-over-year.

The introduction of Facebook Product Ads falls directly in line with the trend of display-based product advertising. Although it seems unlikely Google Shopping will suffer in response to Facebook’s latest development, it does warrant a new conversation within retail organizations.

“From my standpoint the two offerings – Dynamic Remarketing from Google and Product Ads from Facebook are fairly complementary today since neither one is really competing for the same impressions or placements on publisher exchanges,” Nii A. Ahene, COO at CPC Strategy said.

“Google owns display outside of Facebook and Facebook owns display within it and on mobile apps. Where things really will heat up will be if and when Facebook decides to compete more aggressively for traditional display placements from publishers on desktop and mobile.”

What does this mean for retailers?

CPC Strategy’s leading ecommerce experts discuss the launch of Facebook Product Ads and its potential impact for retailers eager to engage in the new marketing program.

What is the best way for retailers to test out Facebook Product Ads?

“Find an agency who can effectively create, scale and manage these campaigns, preferably one that specializes in product data feeds and/or ecommerce. Since this revolves around structured data and ecommerce, finding someone versed in both will likely be crucial to both the short and long term success of the campaigns. I don’t anticipate any phase of this program being more simple to execute on than Google Shopping, so if you already trust your product ad campaigns to experts, you should do the same here.” – Josh Brisco, Senior Retail Search Manager at CPC Strategy

How will Facebook Product Ads impact the retail Sales & Marketing portfolio?

“This launch opens up Facebook advertising to direct response marketing and more specifically product marketing. In the past this has been a weakness of Facebook and isolated an entire industry from being able to effectively market these products on Facebook.

This launch will give our clients access to another huge channel to help drive relevant traffic to their site. This launch also poses an interesting challenge to third party vendors who use FBX for ad buying for their clients.” -Stephen Kerner, Retail Search Manager, CPC Strategy

rick-backus “According to Forrester, 39 percent of U.S. online shoppers began their product research on Amazon, while less than 11 percent of U.S. online shoppers started their research on search engines like Google. Google has a huge challenge in front of them to close that product research gap with Amazon but they are light-years beyond Facebook when it comes to retail search intent.

Simply put, users do not sign-on to Facebook with the intent to make a retail purchase which by default makes Facebook a poor direct response retail channel. Product ads are a huge step in the right direction for Facebook but I wouldn’t expect (or advise) retailers to shift a large percentage of their Google Shopping budget to Facebook in 2015.”-Rick Backus, CEO, CPC Strategy

josh-brisco-facebook-product-ads “I don’t see this having a huge affect on Google Shopping or Google Search as a whole. Google is a search engine, so someone has to actively search for a product there to be served an ad, which denotes retail search intent. Facebook advertising on the other hand is more passive in how ads are served, more similar to traditional display marketing.

Until overall search via Facebook really begins to rival Google, this product should not make big waves in that respect. In the meantime, this may mean that more ad dollars are allocated to Facebook by ecommerce retailers, but other than that I don’t see a huge threat to Google.” – Josh Brisco, Senior Retail Search Manager, CPC Strategy

nii-ahene-facebook-product-ads “Plainly speaking, it extends the ability for retailers to reach their customers on a very active platform with a new and potentially more relevant ad unit than what was previously offered by Facebook or third parties.

Companies like Teespring and Fancy have shown that it’s possible to get direct response return from Facebook outside of retargeting. The roll out of Facebook Product Ads means that Facebook now has increased potential to drive new sales and engagement for a wider breadth of retailers.” – Nii A. Ahene, COO, CPC Strategy

Product ads are available in the API through Facebook Marketing Partners and in the next few weeks the newest features will be available on Power Editor, an advanced tool that helps businesses manage multiple campaign ads.