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How Facebook Plans To Manage National-To-Local Advertising For Retailers

With the addition of its Dynamic Ads for Retail product, Facebook is promising to drive more online-to-offline store traffic.

As Facebook, Google, and other platform companies race to provide online-to-offline marketing services for local businesses, the social network is rolling out a new ad product that promises to increase in-store traffic driven by mobile consumers.

A Dynamic Ad for Macy's in action.
A Dynamic Ad for Macy’s in action.

Abercrombie & Fitch, Argos, Macy’s, Pottery Barn and Target have signed on to test Facebook’s new ad product, which vows to match consumers with real-time ads for only those products that are immediately available on store racks.

Competitive pressures aside, the marketing landscape for managing businesses’ digital presence and omnichannel strategies for attracting store visits remains wide open.

“49 percent of in-store purchases are influenced by digital interactions—over half of which take place on mobile,” Facebook notes in a blog post touting its new foot-traffic marketing product. “As this trend grows, brick-and-mortar retailers must evolve their campaigns to reach people on mobile, showcase products and ultimately, move products off shelves.”

In June, Facebook rolled out several tools tied to its Local Awareness Ads that are also intended to drive foot-traffic to physical shops, while providing a layer of attribution as to whether the ads actually worked.

Now, Facebook is reporting over 1 million store visits per day at 100,000 locations that it helped generate. On a less specific note, the social network points to a “growing number of retailers” that are using its Offline Conversions API to verify that people seeing their ads are making in-store purchases.

The next piece in the local puzzle, then, is today’s news: the introduction of Facebook dynamic ads for brick-and-mortar stores.

That move appears to be a direct challenge to Google’s own inventory ads under its Product Listing Ads. In May, Google Now, the search giant’s “anticipatory” all-encompassing search and recommendations mobile app, began connecting consumers to real-time inventory listings on Google Maps.

FB’s Critical Advantage

Nevertheless, analysts are impressed with Facebook’s latest overture to local marketers.

“In short, other providers offer these types of local retail ads,” digital marketing analyst Rebecca Lieb tells GeoMarketing. “So the product itself isn’t new. But it is an important addition to Facebook’s product offerings, and there’s a critical extra advantage: Ads can be targeted to Facebook’s custom segments, adding significant extra power and precision.”

Many retailers already use Facebook ads to promote their in-store products, but until now it wasn’t feasible to customize creative for every store location based on local product availability, pricing or promotions, Facebook’s rep says.

“Marketing out-of-stock products or inaccurate local prices can lead to a bad customer experience and wasted impressions,” the social net says. “Now, with dynamic ads for retail, campaigns can dynamically showcase products available in the store that’s closest to the person seeing the ad.”

Yoram Wurmser, an analyst for eMarketer, also sees the benefits for Facebook in its competition with Google, as well as clear advantages for local marketers seeking to take better advantage of real-time advertising:

  • This is a good move for Facebook, since most (more than 90 percent) purchases still happen in stores, Wurmser notes. Product ads generally don’t lead to an immediate online sale. More often than not, they lead to an offline sale. Having dynamic ads that point directly to the physical retail location, including with maps, makes that online to offline connection more clear, and the call-to-action more in line with existing consumer behaviors.
  • This also bring dynamic ads in line with the local inventory ads that Google already offer. In Google’s case, those ads perform better than standard PLA’s. PLA’s and dynamic ads serve different functions. “PLAs are clearly intent-triggered, whereas dynamic ads are more reminder or interest-driven. Still, they’re increasingly converging, and I think this gives Facebook a richer product range that could start to make a dent in some of the spending now going to Google,” the eMarketer analyst says.
  • Facebook has been working hard on O2O (online-to-offline) links. They brought out an offline conversions API and store traffic metric in June. “These ads ride on top of these attribution tools. I expect to Facebook to continue to build out the O2O capabilities and products,” says Wurmser.

Solving The National-To-Local Marketing Problem

In a sense, Facebook is helping national marketers manage their local marketing and ad targeting.

As a hypothetical, Facebook presents the idea of a fashion retailer that wants to advertise a national sales campaign that touches every store. But to ensure the kind of personalization that both consumers and advertisers demand,  the dynamic ads for retail will only highlight items that are currently available at a nearby store and display the price found at that location.

“As the ads are linked to the local product catalog, if a product sells out in one store, the campaign automatically adjusts so that people in that region will no longer see it advertised,” Facebook says. “Product selection for each ad can be optimized based on people’s online and mobile shopping behavior.”

Inventory ads "geoTargeted" by Facebook.
Inventory ads “geoTargeted” by Facebook.

Geotargeting And Attribution For Visitation

There is no shortage of location ad targeting and attribution solutions out there. But the bar is higher for Facebook, given the depth of its reach.

To ensure the value of its dynamic ads for retailers as a tool for driving connected mobile consumers into stores, Facebook’s  “Store Visits Objective” builds on the geotargeting and ad format features of its Local Awareness Ad solution and introduces store traffic measurement “as the primary reporting metric and a new optimization model.”

Store visit optimization helps advertisers reach people more likely to visit their stores, in order to decrease the reported cost-per-store-visit. By way of prood, Facebook notes grocery chain Albertsons’ ability “to reach people more likely to visit their stores and decrease cost-per-store-visit by up to 40 percent in a recent test.”

By promising to “improve” geotargeting, a vow that may seem even beyond Facebook’s capacity, advertisers can use its tools to define a targeting radius based on population density and desired reach.

“Dynamic ads for retail leverage the store visits objective to take advantage of this new optimization model and more powerful geotargeting features,” Facebook says. “Store visits reporting is an estimated metric based on information from people with location services enabled on their phone.”

The Test Begins

Although the testing has just begun, the major retailers participating in Facebook’s program are already cheering. Considering the news of poor performance and store closings this past year has led to talk about the crisis of major retail and brick-and-mortar, the big brands could use something to help advance their respective omnichannel moves.

“Extending the power of Facebook’s dynamic ads to in-store inventory opens up exciting new possibilities for Macy’s as an omni-channel retailer,” said Serena Potter, Macy’s Group VP of Digital Media Strategy, in a statement. We were excited to be the first up and running with Facebook’s dynamic ads for retail as it truly allows us to personalize product ads based on online behavior and inventory at the nearest Macy’s store. This bridges our online and offline channels to deliver a more engaging, relevant, and useful experience to shoppers.”

“Dynamic ads for retail allows us to take our product assortment and not only personalize it based on a customer’s online shopping behaviors, but localize the assortment in real time,” added Billy May, SVP-Marketing, Direct-to-Consumer, & Corporate Development for Abercrombie & Fitch. “Facebook is helping us build a solid foundation to understand the impact digital marketing has on store traffic and sales by taking the results and tying them back to our customers who were not only exposed to a dynamic ads for retail campaign, but took further action and crossed our lease line. This is another step in putting our customer first by providing them with a seamless experience, which is at the core of our marketing strategy at Abercrombie & Fitch.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.