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HindustanTimes Sun,21 Sep 2014

Social Media

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With 1-bn b'day data, Facebook adds a Gift store
Somini Sengupta, New York Times, Hindustan Times
San Francisco, November 28, 2012
First Published: 21:34 IST(28/11/2012)
Last Updated: 21:39 IST(28/11/2012)

Facebook is already privy to its users' e-mail addresses, wedding pictures and political beliefs. Now the company is nudging them to share a bit more: credit card numbers and offline addresses.

The nudge comes from a new Facebook service called Gifts. It allows Facebook users - only in the United States for now - to buy presents for their friends on the social network. On offer are items as varied as spices, pajamas and subscriptions to video services. This week Facebook added iTunes gift cards.

The gift service is part of an aggressive moneymaking push aimed at pleasing Facebook's investors after the company's dismal stock market debut. Facebook has stepped up mobile advertising and is starting to customise the marketing messages it shows to users based on their browsing outside Facebook.

Those efforts seem to have brought some relief. Analysts issued bullish projections, and the stock was up 49% from its lowest point, closing Tuesday at $26.15, although that is still well below the offer price of $38. The share price has been buoyed in part by the fact that a wave of insider lockup periods expired without a flood of shares hitting the market.

To power the Gifts service, Facebook rented a warehouse in South Dakota and created its own software to track inventory and shipping. It will not say how much it earns from each purchase made through Gifts, though merchants that have a similar arrangement with Amazon.com give it a roughly 15% cut of sales.

If it catches on, the service would give Facebook a toehold in the more than $200 billion e-commerce market. Much more important, it would let the company accumulate a new stream of valuable personal data and use it to refine targetted advertisements, its bread and butter.

"The hard part for Facebook was aggregating a billion users. Now it's more about how to monetise those users without scaring them away," said Colin Sebastian, an analyst with Robert W Baird. "Gifts should also contribute more to Facebook's treasure trove of user data, which has the benefit of a virtuous cycle, driving more personalisation of the site, leading to better and more targeted ads, which improves overall monetisation."


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