Advertising comprised more than 97% of Facebook's revenue in 2016, at $26.9bn, so it's no surprise that the company is investing heavily in developing new features – such as the recently announced Collection – and comprehensive analytics capabilities. Collection is a mobile-optimized ad format that enables brands to combine a video, slideshow, or banner image with product images. It fits neatly within the four key themes that Facebook outlined during its recent Industry Analyst Day in New York for enabling businesses to not only advertise but also drive sales across all of Facebook's relevant properties: Facebook, Facebook Messenger, and Instagram. The four key themes are shoppable mobile experiences, vertical solutions, harnessing data and machine learning, and addressing scale (including SMEs).
The rise of video is a key driver for Collection
Collection is the latest addition to Facebook's mobile-first rich media advertising inventory, sitting alongside Carousel and Canvas. While Carousel and Canvas enable brands to create ads that use images, videos, texts, and web links (for shopping), Collection also allows brands to partner a hero image or video with a collection of product images within a newsfeed-like layout. Brands can choose which initial four products are shown, and if users tap on the ad they will see a catalog of up to 50 other products, which are selected by Facebook's ad-targeting platform. Selecting a product will take the user to the brand's website to complete the transaction.
According to Maz Sharafi, Facebook's director of monetization, Collection fits into Facebook's strategy of seeking to provide its users with an engaging shopping experience that recommends relevant products while being fast and immersive. The growing popularity of video among consumers and brands helped catalyze the development of Collection, but Facebook was also cognizant of the need to ensure a fast loading experience. Sharafi notes that users will leave a mobile website that takes too long to load.
Within the framework of the four themes it will focus on in 2017, Facebook plans to invest in enhancing its customer acquisition solution for brands and build other products that will help brands to stimulate online, offline, and multichannel sales. Facebook's efforts in this area are centered on mobile app ads and lead ads. These will help brands generate customer lifetime value by targeting an audience that Facebook can predict – with a high level of certainty – will install a brand's app and use it to make purchases or fulfil a call to action (e.g. book a test drive).
To help brands boost online sales, Facebook plans to focus on making Facebook Pixel more accessible to SMEs by partnering with companies such as Shopify. It is engaging with a number of partners in different areas to address the SME market more effectively. Another such partner is mobile payments vendor Square. Facebook has also updated its Dynamic Ads engine to include cross-device retargeting (for capabilities such as product recommendations) and to enable brands to offer features such as strike-through pricing. In addition, Facebook has launched its first vertical-specific ad product on Dynamic Ads – Dynamic Ads for Travel – which is a dedicated advertising capability for the travel industry which allows strike-through pricing and customer reviews to be included within the ad itself. (The company has been testing Dynamic Ads for Retail as well.)
For offline and multichannel sales – that is, connecting mobile advertising and commerce to offline (in-store) purchases – Facebook will focus on three areas: store visits, offline conversions, and retailer solutions. For the former, Facebook will use the location data of opted-in mobile users to show retailers who has visited their stores. It will also use consumers' online activity to predict who will visit stores in the future, showing relevant ads to prospective customers. Meanwhile, Facebook also intends to integrate its Offers capability into all of its ad formats, which will further drive offline conversions for brands.
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