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Summary:

Google launched the +1 button, a social signaling effort that at first blush seems to be all about publishers and page views. In reality it is about the future of web commerce, where Facebook is becoming even more influential, thanks to it’s near ubiquitous Like button.

like

Facebook Likes, Google’s +1, retweets, Digg votes; when it comes to the social web, every social signal is a positive signal. It seems that we like everything — or almost everything, because when we don’t like something, we don’t say anything about it. Sometimes it feels as if we are living inside one giant Kumbaya bubble, and that leads me to wonder: Should we trust the fidelity of these social signals to begin with?

As best-selling author Barbara Ehrenreich wrote in her recent book Bright-Sided, that positive thinking is “a water carrier for the business world, excusing its excesses and masking its follies.” I am a cynical optimist and that is why I often wonder, what are likes really good for? In a recent piece, Danny Sullivan, the editor of Search Engine Land, pointed out that Facebook Likes tend to boost traffic to various websites. He cites Facebook data as saying that by implementing Facebook Likes, denim maker Levi’s say they received a 40-times increase in traffic.

But did those likes increase Levi’s sales or their market share? No. The San Francisco-based denim maker is still sucking wind when it comes to growing denim sales, likes notwithstanding. Confounded, I started looking for answers, partly by reaching out to my virtual Twitter friends. And that led me to Scot Wingo, CEO of Channel Advisor, a web commerce services provider based in Research Park, North Carolina.

Money and Likes

When I asked Scot if there was a direct correlation between Facebook Likes and actual sales, he candidly admitted that at present there isn’t much correlation. But he, like Facebook itself, is betting that the Facebook Likes will become an increasingly powerful signal in transactions on the web.

“In 12 months it (Facebook) could become a legitimate monetization option,” Wingo predicts, and in the process it could end up becoming the disruptor of web commerce. It would then become a big thorn in the side of Google, which currently derives nearly 40 percent of its revenues from e-commerce-related activities. He is predicting that we are going to see “like” influenced web commerce during the holiday season this year.

Wingo says that, today, merchants big and small are interested first in Facebook, then in mobile and then in local when it comes to their e-commerce strategies. With nearly 700 million members, Facebook has the momentum to become a big driver of sales for these merchants. And the Like button is at the heart of it.

Not all likes are created equal

On Facebook, there are likes that allow you to become fans of a brand or like a photo or an article. Of course, when you like a brand, you also open yourself to becoming the “sponsored ad” that is sent to your friends on Facebook. A lot of retailers are doing that. There is another aspect to that: when you like a brand (aka you become its fan), you are essentially giving the brand permission to message you. Think of it as a way for retailers to use Facebook to send you coupons and deals based on what you like.  While these deals are not personalized, they are personal since you are a fan of that brand.

And then there are the off -Facebook Like buttons — about two million of them spread across the web. There are two kinds of off-Facebook Like buttons (though they look the same) – ones thatfolks like GigaOM use on their website and the special Open Graph protocol-based Like buttons that are for brands, retail outlets, musicians, anyone who wants to create a direct relationship with an actual person. A Facebook spokesperson described these Like buttons as Facebook away from Facebook.

So for example, if you like a band it will publish that information to your newsfeed. So far only entertainment sites and a handful of news outlets are using these special kind of like buttons. However, they are the ones that can create a new dynamic for commerce. Facebook’s Open Graph API has had some enhancements and in theory it allows retailers to have richer metadata such as product types and SKUs attached to their Likes.

In theory, if you liked a pair of jeans on the web, a retailer can target you on Facebook with a discount to get your business. Remember the “personal data” resides with Facebook and not with the retailers, so these interactions can only happen on Facebook – for now. Similarly, the metadata attached to “likes” can help deliver search results that are optimized around one’s preferences, as long as you are logged in using Facebook Connect.

Google doesn’t like the Likes

And that is one of the things spooking Google, which launched the “+1” feature almost as a defensive countermeasure, though it’s not clear if that is going to have any impact anytime soon. Google’s latest revision of the +1 button will allow publishers to embed the button into their web properties.

In a blog post, Google writes, “Today, we’re releasing +1 buttons to the whole web. As a result, you might start seeing +1 appear on sites large and small across the Internet.”

To the naked eye, it seems all about bringing more traffic to web publishers, but in reality it is all about business, as Frank Watson had pointed out on Search Engine Watch earlier this year. As Google itself notes, “With a single click you can recommend that raincoat, news article or favorite sci-fi movie to friends, contacts and the rest of the world. The next time your connections search, they could see your +1’s directly in their search results, helping them find your recommendations when they’re most useful.”

The Like button, when put in the context of web-commerce, is as powerful an indicator of intent as search is, Wingo said. “I would say because it is more personal and social, it is one step closer to the end customer, and as a retailer, that is something that is very appealing.” No wonder Google’s chairman Eric Schmidt is kicking himself for blowing it when it comes to social!

  1. If you do a lot of your business through Adwords, you have a vested interest in making +1 work. Google will make +1 conversions a quality signal within their ad serving algo, and it gives you yet another way to separate yourself from less savvy advertisers. Frankly, someone the searcher knows recommending your product within your ad is a very seductive proposition. Who knows if it will catch on or be another social fail from Google, but if you are an advertiser you want it to succeed.

    Adwords is becoming an increasingly stratified platform designed to reward people with big budgets who can achieve economies of scale (or in this case +1s).

    You are right in that FB’s strength for ecommerce companies is not as an acquisition tool, but as a more casual version of email. Its an easy way to keep in touch with your customers, to have conversations, and to provide support for your products.

    While the buttons may look the same, what you are getting out Google vs. Facebook are entirely different.

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    1. Chris

      Thanks for that insight into the +1 impact for Google and the Adwords. I do agree with you – the system is increasingly skewed in favor of those with big budgets and that is why more people are willing to try Facebook.

      But I believe that we are beginning to rethink the whole idea of what web-commerce transactions mean and Facebook does have room to disrupt, or at the very least, divert a sizable revenue stream away from rivals.

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    2. Chris

      Spoken like someone who knows the SEM space well. I agree with your thinking and the statement below.

      “Its an easy way to keep in touch with your customers, to have conversations, and to provide support for your products.”

      Facebook is a great place to consolidate your brand but much less so to broaden it. If you already have an audience for your product on the open web, you will find those customers on Facebook and can aggregate and socialize with them.

      But for small companies its a challenging launch pad. Larger brands who can build apps seem much more effective on campaigns there.

      Do you agree?

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      1. I agree with you Arnold. I just launched my startup company, and although I would say that having a Facebook presence is absolutely necessary for businesses, our fan base hasn’t grown much despite a Facebook “like” button on our website. Nevertheless, it made us more “available” and already several people contacted us through our wall.

        This is the great thing about Facebook: people are always connected and can very easily write on your wall or send you a message without having to start a webmail client, copy and paste the email address, type a subject, be formal etc… Plus it’s all about curiosity : people will see that their friends liked/wrote on your page, and even if they don’t become a fan, they will at least hear about you. Not so much with Google +1.

        Now, I’m wondering did anyone of you experiment with Facebook adverts and compared them with Google adwords? We have an Adwords campaign going on, and we’re thinking of launching a Facebook campaign as well. Is one more effective than the other? Could the Google +1 button change that effectiveness?

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    3. Chris

      In response to your comment to me below, I would have to know more about your biz as I always initially question why SEM not SEO or Social is not your emphasis.

      I’ve done some projects on this for my clients which resulted in the following posts which may be helpful:

      -Coming to terms with search in a social world http://t.co/R0vFEuC

      -Choosing context over friendship to filter the social web http://t.co/DJo0WmO

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      1. Starting at the top, I think that people want Facebook to become an ecommerce powerhouse for several reasons:

        1. The market is missing a counterweight to Adwords.

        2. Facebook is serving 30% of US online ads, ergo its volume is too big to ignore.

        3. Evolutionarily, this feels like the next step past straight up search.

        Just because people want this, does not mean that Facebook is there yet and it does not mean that they will get there. Its possible they will and its possible they won’t. I have no opinion whether they can do it or not. Not everything on the web needs to be a sales platform.

        For my business, Facebook is not there yet. The biggest problem we have with Facebook is that it charges targeted search CPC rates for display performance results. FB either needs to either deliver converting traffic better or devalue their CPCs significantly for my business to work. We get the same conversion rates running banners on Bollywood sites as we do on Facebook, but at 1/5th the cost. That is a real issue that FB needs to deal with if it wants to be taken seriously as a sales tool.

        I am sure there are plenty of cases where people are killing it on Facebook, but there are plenty of cases where FB does not work for them. A lot of tech people are throwing out an argument that companies who are not doing well on FB are dinosaurs that just don’t get it. About a month ago there was a big argument on webmasterworld.com about this very issue. The fact is that FB is not there yet, and people should treat marketing on FB as an open question. Ultimately it may be that selling on FB is like trying to fit the old square peg in a round hole.

        @Arnold – We’ve tried SEO and we’ve tried FB. Neither work as well as SEM. Our organic search rankings are great, but it does not deliver a ton of traffic. This might be peculiar to our niche, but at this point I have stopped worrying about it because we do very well on word of mouth and SEM.

        When it comes to FB, I am waking up to the fact that we can use it to augment what we know about our customers and how we can better serve them. Maybe one day it will morph into a great referral platform as well, but that train is not coming anytime soon.

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    4. @Chris

      Focusing your business or any business on any one platform is a bad strategy.

      Your URL is your core. Facebook. Twitter and on and on. All good channels. All good ways to take your message to where your audience is. Ecommerce for most companies has a mixed funnel of direct, SEO/SEM and social. Finding the mix is where the magic formula for success lies.

      No one formula or platform suits all.

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      1. When I need to reduce my exposure to Adwords, I will start running TV ads. So yes eventually I should not rely on one platform (the web).

        I enjoy hearing the reduce your dependencies, spread the love, open your eyes to social story, but the real politik of it is that marketers should pound the channels that work for them, keep an eye on the future, but not throw good money after bad just because people outside your business are in love with possibilities.

        Ecomm and customer acquisition is not investing. If a channel fails one day, you won’t lose what you have already acquired through it. You will just need to find a new channel.

        All I can talk about is what works for me. Right now our strategy is antithetical to diversification because middle of the road companies are increasingly being squeezed out of our space. In a year when there are only 3 brands that matter in our niche and we are one of them, I will change my tune and start preaching diversity.

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    5. @ Chris

      Nobody knows your biz like yourself. Far be it from me to be a pundit, not my intent nor my poise to anything.

      To close, and this has been instructive, I’ll agree with your statement that :

      “If a channel fails one day, you won’t lose what you have already acquired through it. You will just need to find a new channel.”

      is only true it seems if you can take your customers with you. Channels are funnels, customers though don’t always move when the funnel or location does.

      Me–arnold@waldstein.com if you want to pursue this so we don’t hijack On’s thread worse than we have.

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  2. Bob,Boulder, Colorado Thursday, June 2, 2011

    nice analysis about the potential for facebook likes, but the thing is facebook ‘like’ and +1 are not the only games in town, how about tweet or linkedin shares or amazon likes?. Amazon ‘likes’ are in my opinion more important because they are paying customers, when a facebook user likes something, we have no idea why he likes it, there is no relevancy attached to it, but when an amazon user ‘likes’ something, now that is a much much more stronger indicator that the customer likes the product. Google should try to form a partnership(aka pay money to Amazon) to get access to amazon ‘likes’

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    1. stevie wonders Friday, June 3, 2011

      great analysis, but I feel there is one aspect overlooked in all this, which Bob hints at: social is for most users not about web-commerce, while amazon is.
      Therefore if I go physically shopping for my new pair of jeans, will I remember that my friend liked the new Levi’s? Probably not, and even if, will it influence my choice (maybe I do not like my friends style that much)?
      While the amazon “customers intersted in the same book as you have also bought xxx” is the same as a supermarket hitting you with a rack of sweets while you are queing at the check out. This is catching you right at the point of sale.
      We all know that transferring “real world” interest in “online” and vice versa is difficult. Therefore I think facebook “likes” and google “+1″ will still have to think about making social networks work for commerce.
      Privately I bet alternatives to facebook will become highly attractive as soon as the commerce is taking over too much. We have seen some aspects of advertising on facebook already curbed in order to maintain the “social” aspect of facebook and not make it an advertisement platform.

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  3. Great topic. I covered it from different angle from on my blog post yesterday (would love your thoughts): http://blogs.powerreviews.com/2011/06/01/google-1-launch-what-google%E2%80%99s-social-reinvention-means-for-facebook/

    You are absolutely right that it’s about incremental sales. The rules of commerce haven’t changed, after all. It’s about Traffic X Conversion X Avg Order Value. Google has long dominated as a Traffic source. But with Social, for the first time, online retailers are seeing the first glimpses of a net new source of traffic. So they’d be wise to investigate, but with a “show me the money” attitude.

    The power of Like is that it can drive impressions in-stream, which is the most valuable real estate for driving CTR. People do interact with commerce related content, it just has to be done by the right away (e.g. from the user’s friends). Indeed, we found that 70% of user-generated product reviews posted to Facebook streams receive Likes/Comments: http://www.powerreviews.com/infographic-facebook.php). So people are discovering content — even commerce-related content — on their newsfeed, instead of Google.

    Google understands this. And they’re rightfully worried. Hence the +1 button. But as I argue in my post yesterday, this is a great thing for ecommerce players, and they should experiment with both Like and +1.

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    1. Bob,Boulder, Colorado Friday, June 3, 2011

      Google search is easy to monetize and is understandable for everybdoy, advertisers bid on keywords that the customer himself is entering into the searchbox, now how will facebook monetize ‘likes’ ? they can sell ‘likes’ to bing, but what next ?

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  4. I think the vast majority of facebook users rarely like any blog or news article. People are way more shy than you would like to believe to even promote themselves, you actually think they would promote random products and blogs…no way. maybe they will promote some fashion iconic fashion brands like apple, coke..but not too many. In any case, there will be too much spam for this to work.

    +1 buttton is much better, in the sense that you dont spam anybody but still express your appreciation of the content…but i dont see either of them driving sales or traffic too much, especially in the long tail.

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  5. Garrett Hogan Friday, June 3, 2011

    The Fact that Levi’s shows no sales increase after a significant increase in traffic could be a reflection of the economy and the fact that “soft goods” have been the hardest hit segment of the retail world. Is it possible that “likes” and the resulting traffic they generate are a modern version of window shopping? If increasing traffic to a brand’s online presence is the goal of the “likes” feature then it seems to be working. When the economy improves and consumer soft goods purchases increase then we might see the “likes” feature as a significant driver of sales and not just traffic.

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  6. I wanted to +1 this but couldn’t find the button. TechCrunch has it!

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  7. Impact and context are major factors in terms of value.

    Obviously, a binary signal of like/dislike for a product has, comparatively, a far smaller impact than a detailed review of the same thing. I’d argue that outside of a social context, the impact of a ~”like” is virtually zero, whereas the impact of a detailed review is still quite significant (think Amazon).

    Within a social context, however, a friend’s liking of a product does have an impact and would certainly be sufficient to sway decision. So if I’m searching for a pair of jeans, the fact that my friends converge around a particular brand would guide me in that direction. Of course, a friend’s detailed review of a product they loved has the potential to create interest where none existed prior, so remains far more powerful. That is, if I was alerted that my friend just found one of the greatest products ever, I might go out and buy it, even if I had no prior knowledge or interest.

    Ultimately, binary indicators are and will always be of limited value, since they can’t capture depth of feeling.

    I think the key to this issue, which no one really has nailed thus far, is making sure strategies are appropriately embedded as part of users’ normal web experience.

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  8. Pointless without a “Don’t like” or “-1″ button.

    The real data is hidden, kept secret as to artificially pump advertising rates. This is what should be displayed:

    Of 204,651 unique impressions there are 1,034 “Likes” and 67,9033 “Don’t likes”

    Above conveys meaning and context. Without it, the button wars are insipid dribble.

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  9. Great article, but I wrote it yesterday :o)
    http://wp.me/p12GiE-1F
    Guess great minds do think “somewhat” alike.

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  10. The problem with the +1 button is there is very little incentive for me to actually click it. Unless I am a) A website publisher trying to game my own SEO b)curious c)improving my own search results (who is ever going to bother with that) there is no other incentive to click it. Google will have to think of something fast like linking it back to some sort of social interaction on Google Profiles or else it will just die off like the buzz buttons.

    The like button is totally different becuase people click that to share stuff they “like” with their social circle and you can see how that could lead to sales.

    Interesting times and very early days in this battle but shaping up nicely

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    1. If you ask, google has done a clever thing, they have disambiguated +1 from social, so many people click disqus ‘likes’, despite their being no incentive, something similar is going to happen in this case too, people will +1 if they like an article. But the kicker is google is trying to build social graphs via other means like buzz, gmail, places, docs, google voice etc

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  11. Which do you prefer? Facebook “Like” or Google “Plus”? Just make you choice here, http://likevsplus.thewebsys.com/ Enjoy it :-)

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  12. Funny thing, some websites are made only to make fun of the battle between Facebook and Google+ , like this one here http://facebook-vs-google.net

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