Facebook Launches Product Ads, Wins Influencers Patent - Analyst Blog

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Facebook, Inc. ( FB ) has launched a number of new features and applications for its platform in its effort to gain an edge over competitors like Google Inc. ( GOOGL ) and Yahoo! Inc. ( YHOO ) among others. Most recently, Facebook launched its Product Ads feature that allows retailers and marketers to showcase their product catalogs to people efficiently.

Not only will the marketers now have additional flexibility to feature their products, but will also have the means to reach customers with more likelihood of selling their products. In fact, retailers like Target have already witnessed a significant increase in their conversion rates (up 20%) after using Product Ads instead of other Facebook ads.

Facebook's "Identify experts and influencers in a social network" patent has made this possible.

Facebook can use the patented technology to identify the content creators or 'experts' and also the people that caused the content to spread widely (influencers).

Though other technology companies like Google, Yahoo, and Microsoft Corporation ( MSFT ) have previously received patents for influencer-based marketing, Facebook's approach is much better. That's because Facebook directly measures the influence, while the other companies rely on the number of connections a person has, many of which may not actually be influenced.

So Facebook is now in a position to fix a separate (and higher) price on influencers, since they draw more traffic. Advertisers will naturally be interested in ads targeting only these people so as to maximize their return on investment.

Earlier this month, Facebook introduced a range of other features like inclusion of legacy contact in a profile, additional buy and sell features for Facebook Sale Groups, place tips for more information based on the user's current location and also providing free Internet to emerging nations including India (read: Facebook's Launch in India to Boost User Base ).

The stronger pricing will undoubtedly build on Facebook's margins. The company's earnings missed the consensus mark despite modest revenue growth due to rising research and development (R&D) and sales & marketing costs. Now the company is leveraging its huge user base and its ability to track personal details to strengthen its foothold in the online ad market.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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