Facebook is the most used social networking site on the internet. Amazon.com is America’s largest online retailer. The most used social networking site and America’s largest online retailer have joined hands in what is, perhaps, the most important partnership of the internet era. Should Google be worried?
Amazon has released a beta Facebook application that allows users to connect to their Facebook account and view product recommendations from friends. Once the user logs on, they would receive product recommendations from the online retailer, based on their online profile.
The Facebook Amazon partnership is a significant event because it combines the two, most popular, activities that users indulge in on the internet: Catching up with friends and shopping. Internet pundits are closely observing this partnership as it could bring in a change of guard in the online advertising vertical, currently ruled by the most popular internet search engine.
Google, with its innovative business model, has been the poster boy of online advertising. Internet companies have studied Google’s pay-per-click (PPC) model microscopically and looked to replicate their (Google’s) success. The AdWords advertising platform of the internet giant is its cash cow and earns billions of dollars in revenue for Google.
AdWords is based on a simple principle: when the user clicks on a sponsored link, the company pays Google for it. The principle works on an assumption that once user clicks the link, he or she might be interested in purchasing the product. One weakness of this advertising platform is that there is no quantitative data to prove the ROI. In other words, there is no proof that the user actually bought the product as a direct result of the sponsored link.
The seminal partnership between Facebook PVA Accounts is set to revolutionize the way online advertising is measured for effectiveness. And this puts the multi-billion dollar ball, of online advertising, firmly in Facebook’s court.
The social networking giant has been trying, for a long time, to prove to advertisers the marketing effectiveness of their social media platform. Facebook contends that though users log on to the site for socializing, the ads displayed on the site help improve brand recall and brand awareness. Moreover, the site could also be used as a powerful mouth-of-word marketing tool. To try and prove their marketing potential, Facebook hired renowned market research firm, AC Nielsen, to conduct a study last fall.
The tie up with Amazon will provide Facebook with important pieces of data related to purchasing habits of its users. With this data, the social networking site could prove how the ads posted on Facebook lead to direct sales.