Posted on June 19, 2012 · Posted in Social Media

President of, an online vendor for luxury watches, shared his retailing and sales experience with fellow internet retailers about how Facebook has come in handy for increasing his annual sales. According to Krishan Agarwal, his sales have gone up by almost 25% within two years of business. He shared that his expenditures for the Facebook advertisements up till now were below $1500; the rest of the publicity and promotion accomplished via Facebook were absolutely free of charge.

At the Internet Retailer Conference and Exhibition held in Chicago and attended by numerous online vendors and retailers, Dalton Investment’s former hedge fund analyst stated, “some of the tools that are free are just a lot better than ads on Facebook”. Business owners have found a way of promoting and running their business by making use of Facebook’s free applications, instead of availing its paid advertisement services. The chief strategy officer at an online shipping company, Fiona Dias, shares her thoughts, “the retail sector isn’t buying it. With all Facebook’s free stuff, retailers don’t have to worry whether it works very well. But the moment they pay a nickel, there has to be accountability.” A Similar opinion has been shared by Sucharita Malpura of Forrester Research, who says, “They’re in a huge pickle because most of their business is based on growth in advertising. But why buy that cow when you get the milk for free?”

The use of Facebook made by Agarwal, to earn a huge profit, sheds light on all the problems Facebook is facing in its attempt to generate as much money from this social networking site as possible. The advertisers, however, are not really interested in paying for the ads as they don’t find them to be useful enough.

Another challenged faced by Facebook is due to the competition with Google; Facebook does not hold a candle to Google’s advertisement services. When a user makes a general search for a particular product using the Google search engine, the ads of the product are displayed along with the search result. This results in the possibility that the user would end up buying the product online right away. One the other hand, Facebook users do not intend to buy anything while using the social networking site. One of their friends might suggest them to check out a certain product, but the possibility that they would use Facebook to look up an ad for it is quite low. There is, however, a greater likelihood that they would search for the product information from somewhere else and, if interested, would buy it after some time. This proves that the connection between Facebook and sales is not strong enough. This is the reason which contributes towards the popularity of Google’s advertisement services among businessmen.

In order to make the advertising through Facebook more effective, the company has started displaying ads in the newsfeed of users. Through this new feature, Facebook is also trying to fulfill the need of companies to reach out to their consumer market via mobile phones.

Another important measure taken by Facebook in its struggle to attract businessmen is the introduction of promoted posts. Prior to its introduction, a few of the fans for a certain Facebook page used to receive its updates. However, Promoted Posts allow vendors to promote their business by reaching out to a greater number of potential customers by having their updates displayed in the newsfeed of all of their fans. This is a paid service; as vendors ensure that more and more people are aware about their products and offers, Facebook also receives a reward.

The analysts believe that although Facebook is providing all its applications free of cost at the moment, gradually, the social networking site might just start charging its users for its various tools. An analyst Colin Sebastian stated, “they could experiment with charging for Facebook pages if you are a certain sized retailer,” said Sebastian. “They have to be very careful though. They are trying to create as big a funnel as possible and over time try to monetize that. They would not want to limit the growth of the funnel at this point.”