Facebook has spent years convincing millions of people to upload their status updates, photos, and other personal data to its ever-expanding social network. In turn, it’s used that data to help target advertising and generate revenue.
Now comes the inevitable next stage: Facebook Gifts.
“Starting today, Facebook Gifts will include hundreds of gifts from new retail partners and will be available to more people on Facebook,” read Facebook’s Nov. 15 posting on the new service. Those partners include Brookstone, Random House, Dean & Deluca, Hulu Plus, and Pandora; more apparently will be added in coming weeks and months. Facebook users can gift products and subscriptions to others, simply by clicking a button.
For Facebook, the advantages of entering the online retail game on its own terms are obvious. First, it can collect still more data about its users, including their preferred methods of payment; second, it can monetize many of the users who use the service for free, and might not click on ads. If Gifts translates into significant revenue, it could help Facebook regain some standing with investors who dumped their stock in the company following its less-than-stellar IPO in May.
Facebook CEO Mark Zuckerberg claimed in an October interview with Bloomberg Businessweek that the social network had hit 1 billion users, a milestone he described as challenging from a data-crunching perspective. “A lot of it over the next few years is going to come down to mobile,” he added at the time. “There is this funnel that I think is pretty clear and in our favor, which is there are going to be more people using mobile devices.”
If figuring out a way to monetize Facebook on mobile devices wasn’t enough of a conundrum, Zuckerberg and company also face continuing privacy challenges from groups such as the Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD), both of which petitioned the Federal Trade Commission (FTC) earlier this year to examine the alliance between Facebook and Datalogix, which joined in partnership to measure the effects of marketing campaigns using Facebook data.
And therein lies a potential problem for Gifts: even if the service proves a hit, those same watchdog groups will inevitably question how Facebook collects and handles the new influx of shopping-related data. But if Gifts prove profitable, that could also be a tradeoff the company is more than willing to make.