Social media, and especially Facebook, have become essential business tools for communicating with customers. Some companies have even transferred huge portions of their advertising budgets from traditional media to social media. Pepsi, for example, replaced its television ads with the $20 million social media campaign Pepsi Refresh, but a considerable slip in Pepsi’s sales has marketers wondering whether social media really translates into revenue.
To answer this question, a handful of companies have come out with apps to help monetize Facebook fan pages. Two companies, Mediafeedia and Momentus Media, have created apps that enable businesses to post coupons for promotional discounts on their Facebook page. After clicking on the promotion, fans are prompted to provide their email addresses before receiving the coupon. The company has not only greatly increased the likelihood of the fan becoming a paying customer, but also has potential customers’ email addresses, which it can use for future marketing endeavors.
Another approach to monetizing fans is incorporating e-commerce directly into a business’s Facebook page. In November 2009, the company Payvment launched a Facebook storefront application, which enables users to make purchases from a network of retailers. Payvment users select goods from multiple stores, paying for them all at one time through Paypal or credit card. Like Mediafeedia and Momentus Media, Payvment can also offer promotional deals to fans, but the storefront app offers the additional advantage of publishing a fan’s purchase on the Facebook news feed. This further promotes the item (and by extension Payvment) to the fan’s friends who can then make comments about the item.
Payvment CEO Christian Taylor said, “While Facebook has become an excellent platform to build or strengthen brand awareness and communities, companies and their enthusiastic fans have been unable to take that final step between being a fan and being a buyer.” Turning Facebook into a one-stop shopping outlet, as Payvment has done, is certainly one solution, but it’s not fully realized yet. Though Payvment boasts a network of 60,000 stores, most people do not log into Facebook when they want to make a purchase. Apps that offer coupons to Facebook fans have a different monetizing problem: just because a fan receives a coupon, doesn’t mean he or she redeems it. What’s the return on investment for an unused coupon?
The first unsteady steps in monetizing Facebook have been made, but a successful marketing method or e-commerce app has yet to harness the earning power of the social media giant – though this is likely to change in the next couple years. Is it only a matter of time and advertising before storefront applications like Payvment catch on? Could new partnerships between Facebook and online retailers somehow directly increase sales? For now, the question remains: how do businesses turn loyal fans into paying customers?