Facebook making businesses pay to run Offers

Steven Loeb · September 20, 2012 · Short URL: https://vator.tv/n/2a4f

Offers will also now include barcodes for business to better track campaigns

Now that Facebook is a public company, it has many people that it must prove itself to, most of all stockholders. They want to know that their investment in this company is worthwhile, and to do that Facebook has to make money. The company, it seems, is determined to do that any way it can.

Facebook is making updates to its Offers program, the company said Thursday, while also turning the formerly free service into another source of revenue.

Facebook Offers was created in April to allow businesses and brand to put discounts and promotions on the News Feeds of people who had liked their page. The users would then redeem the voucher at a store.

With the new updates, Offers will now be available to any Page that has more than 400 fans, and the business will now have the ability to put a unique code, or a barcode, on their offers so they can more easily track how many people redeemed the coupon. This was a feature that Facebook says was highly requested by businesses running Offers.

But there is another side to this: Facebook has also made it so that the service, which was originally free, will now cost money for businesses to run Offers in News Feeds.

Within the next few weeks, businesses will have to pay at a minimum of $5 for each offer, with the price going up based on the size of each brand’s Facebook page, a Facebook spokesperson confirmed to VatorNews.

“The new features will help people find the most relevant Offers, such as in their local area, and help businesses better measure the success of their Offers. Offers will remain free for people to claim,” Facebook says.

“Businesses will still be able to run Offers for a minimal budget, but ads must be created in order for people to see Offers in their news feeds.”

It’s not a shocking development that Facebook would seek to make more out of its advertising revenue. In its most recent quarterly report, its first as a public company, Facebook’s advertising grew 28% year-over-year to $992 million. In total, advertising revenue accounts for 84% of Facebook's total sales.  

In the quarter ending June 30, Facebook posted a net loss of $157 million, or 8 cents a share, compared to a profit of $240 million, or 11 cents a share, in the year-ago period. On an adjusted basis, earnings came in at $295 million, or 12 cents a share while sales rose 32% to $1.18 billion, meeting consensus estimates of 12 cents a share on revenue of $1.15 billion.  

Facebook’s advertising strategy

Facebook has made a number of moves in the past few months or so to beef up its advertising revenue, especially when it comes to mobile.

In June, Facebook began running sponsored stories on Zynga.com, based on activity that had been shared on a user’s Facebook page, and in August Facebook’s introduced new mobile ads for apps, which allow app developers to advertise on News Feeds on Facebook’s mobile app.

These ads are made to look like suggestions, or recommendations, for what a user may like. For example, the ad may come under the header "try these games." Once a user clicks on one of the ads, or suggested apps, they will be redirected to either the iOS App Store or to Google Play to purchase that app.

Earlier this week it was announced that Facebook was creating a new mobile advertising network, which would use data it has collected on its users to advertise on third-party apps and websites.

The way it works is that if someone uses Facebook to authenticate a website, that person may begin to see targeted ads for other websites or apps.Authentication gives the app the ability to know the identity of a Facebook user, and to read and write data via Facebook's APIs. The app will then use the Facebook data it has access to, including their sex, age, location and Likes, to target advertisements.

Even as Facebook continues to monetize and improve its mobile advertising strategy, and as its stock as recently begun to rebound after dropping more than 50% below IPO price, growth estimates for the company's advertising properties are dropping. According to a revised forecast from market researcher eMarketer in August, Facebook will barely break $5 billion in revenues for the year.

A majority of the money, around $4.2 billion will come from advertising,  whike the remainded will come from payments and other revenues. The revenue estimate is down $1 billion from the firm’s estimate from last February.

Facebook stock is currently down 1.79%, trading at $22.87 a share.

(Image source: https://www.nimble.com)

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