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I was talking recently to a customer frustrated by his inability to drive meaningful revenue out of Facebook, despite substantial efforts.  The conversation got me to revisit this by now well-discussed topic.

The conventional wisdom is that selling on Facebook doesn’t work because it’s like trying to sell to people drinking at a bar.  (Ref 1.  Ref 2.)  Certainly context matters, but I think this metaphor is misleading.  The same logic could be used to argue that advertising in a newspaper shouldn’t work because it’s like selling to people reading at a library.  Or that advertising on TV shouldn’t work because it’s like selling to people watching a movie.  Or that shops at airports shouldn’t work because they’re like selling to people, um, in the middle of a painful surgical procedure (an experiment on the effects of stress on rats, maybe?).

I’d propose that a lot of the frustration about the difficulty stores have in monetizing Facebook comes from misunderstanding where Facebook fits into the purchase intent cycle.

Purchase intent comes from many sources.  A lot of intent comes from non-commercial sources.  If someone has a baby, they’re going to need a crib.  Trying to create purchase intent for a crib absent a baby is pretty tough.  For discretionary purchases, intent is often sparked by direct experience.  You see something that looks good on someone walking by and you decided you want one, too.  And, of course, purchase intent is sparked by friends.  (One among a gadzillion studies showing this.)  To the degree that purchase intent can be engineered, that’s generally the job of brands, rather than stores.  If a brand can get a consumer to want the thing they – and only they – make, then they are going to make a sale, regardless of the channel in which the consumer chooses to purchase.  Stores generally don’t invest much in intent-generation because of the risk that the money they spend on intent generation comes to nothing when the customer goes elsewhere to buy.  It’s much safer for stores to invest at the intent fulfillment stage.  Thus the success of search engine marketing, which is all about ensuring shoppers who already have purchase intent chose your store for the purchase.  This is also why Sunday circular inserts from merchants generally contain offers on such a large number of products.  The store isn’t trying to convince the reader to want something they don’t already want; they are fishing for intent that already exists – hoping that one of those many special offers will match up with an existing customer need.

So back to Facebook.  I’d argue that Facebook is a pretty good environment for intent generation, and a pretty bad one for intent fulfillment.  This applies both to the organic side of Facebook (friend sharing) as well as the paid side.  This means that Facebook is going to more easily deliver value to brands than stores, and that that value is going to be best measured through traditional advertising metrics like awareness rates and control population studies rather than through online metrics like click-throughs.  It’s possible that with Facebook’s continually improving tools for micro-targeting, they will get to the point of being an economical vehicle for intent-harvesters , but this capability will arrive for some product categories long before others, so sellers should be careful to evaluate the relevance to their particular category before plunging in.

Because Facebook is primarily an intent generation environment, higher-level brand messaging will succeed better than the sort of late-funnel, fulfillment-oriented messaging that works for intent harvesting.  For example, one pet supplies store is having success by sharing cute animal photos that get widely distributed.  The click-throughs are low, but they view this campaign as awareness-building and see the results in site visitor counts and conversion rates over the long run.  Pinboards filled with positive-sentiment checkout comments are also appropriate on Facebook as a tool for intent generation.  Here’s a nice example.  On the other hand, some types of content that are very important for conversion late in the purchase funnel – like customer reviews – are totally out of place in Facebook’s early-funnel, intent generation environment; a product review is just spam to someone who has no interest in the product.

Viewing Facebook through this intent-cycle lens doesn’t produce any magical solutions for merchants to monetize Facebook.  But it does suggest what sort of investments are likely to pay off, and what sort of expectations are realistic. Facebook is going to continue to be a tough environment for merchants because of their focus on intent harvesting rather than intent generation.  And strategies aimed at clicks leading directly to purchases are likely to disappoint.  Stores which take that approach will indeed find themselves in the position of selling in a bar.  But those who find value in developing their store brand and are able to look at brand advertising metrics rather than direct web conversion metrics may yet find water in the Facebook well.

Dell just relaunched their community for IT professionals, rebranding it from AppDeploy to ITNinja, and changing the interaction model from forum to Q&A.  This follows the Q&A models used in other IT communities like Spiceworks and StackOverflow.  It’s a subtle but important change.  A lot of forum discussion takes the form of Q&A anyway, but adding the formal structure of Q&A has advantages.

The core difference is this: a person asking a question is generally seeking answers, while a person making a comment is often seeking an audience.  The person seeking an audience tends to have a more “selfish” set of motivations, like establishing a reputation or promoting an agenda.  Those goals are often better served through vehicles like blogs where the commenter has more control over how their contributions are presented, and where their posts can be easily seen in aggregate.  Hybrid community/blogs where a newsfeed spans across posters but individuals’ profiles are still prominent (like Facebook, Twitter, and Tumblr) satisfy the goals of commenters particularly well (thus the success of these platforms – there are a lot of commenters out there!).  On the other hand, commenters who participate in forums tend to be motivated more by the desire to be helpful than by the goal of self promotion, and if your goal is to be helpful, answering questions is a great way to do it!  So, community forums tend to attract answer-seekers and answer-providers, making Q&A the natural framework.

Of course, the distinction isn’t black-and-white, but Dell’s decision to switch from a forum model to a Q&A model is further evidence that Q&A is gradually taking over from forums as the interaction model for communities.

I just got an invitation to Google+.  After a brief time with it, I’m making a prediction: the Circles thing isn’t going to work.  With Circles, Google+ is making the play to become one network spanning many types of relationship and purpose by letting you restrict your sharing and filter your view of the global feed by sub-group.  Work.  Friends.  People I follow.  There are two reasons I doubt this will work.

Reason #1: I blogged a while ago about something we learned (the hard way) at TurnTo about granular privacy control.  It doesn’t work.  There are people who will use your system, and there are people who won’t use your system, but there are very few people who would-use-your-system-if-only-they-had-more-granular-privacy-control.  Early on, we built a very similar privacy model to Google+: it provided groups to enable users to restrict what got shared with whom.  Like Google+, we offered a set of starter groups and allowed user-customization.  Later, we ripped the whole thing out.  We came to understand that (most) people want to manage privacy at the level of the network, not sub-groups within the network.  People do their work-related networking on LinkedIn and their personal sharing on Facebook.  Twitter is great for following people you don’t know personally (and therefor also useful for businesses to promote themselves).  People decide who to connect to on each network based on what they plan to share (or read) there, and then they share fully with all their connections.  That’s as granular as it gets.  An item that isn’t suitable for someone’s whole audience on a particular network doesn’t get restricted to a sub-group, it just doesn’t get shared at all (or it gets shared with everyone with whatever consequences…).

Reason #2: Different system services are optimal for different types of network; there’s no one-size-fits-all collection.  As a professional network, LinkedIn provides a great structure for exhibiting your work history.  As a personal network, Facebook has great photo sharing.  As a network of mostly-nonpersonal-following, Twitter provides great link sharing.  The network services and the community co-evolve and specialize over time.  If Google+ members really do try to maintain many different types of relationships within the system, they’ll end up unhappy with the tools the system provides.  Either the tools will be too sparse, or the tools to support one type of network will be clutter to the others.  (Would an elaborate resume system be appropriate for your Facebook profile?)  In order for a social network to provide relevant services, there needs to be some level of focus to the type of relationships the network supports.  And once the network has that focus, groups become irrelevant.

If I’m right, someone buy me a beer.  If Circles works out, the drinks on are me.

I now count 6 start-ups offering tools that enable online stores to pay their customers for posting to Facebook about the things they’ve bought.  The flavors and features vary, but pay-for-share is the core mechanism for all of them.

The model that seems to be getting most traction looks like this:

1. Offer the customer a discount for posting news of their purchase to Facebook (and Twitter).

2. Assure the customer that by posting they are also providing a discount to their friends. (With some of these tools, I’ve been unable to figure out how the friends actually get their discount, but that’s probably a failure of my research…)

It’s essential to provide both discounts to maximize sharing.  If the store provides a discount only to the customer, she feels like a shill for promoting the store to her friends just to get a discount for herself.  But if she feels like she is providing her friends with a discount, too, then she can share away to get her own discount guilt-free.

I get the appeal of this model to stores as a way to reach new customers through Facebook, but I don’t get the economics.  Isn’t “paying” your customers to share discount offers with their friends an expensive way to get offer distribution?  Presumably, the customers who sign up are those who plan to use the discount they get for sharing, so the incremental sales / new customer acquisition / many-coupons-expire-unused arguments don’t apply (at least not much).  One store using this tool offers a customer 25% off on their next purchase of $65 or more to share about their purchase on Facebook – so a minimum cost to the store of $16 in lost margin on a future sale.  Say we cut that in half for incremental sales / expired-unused effects.  That’s still an $8 min cost per post.  And the most aggressive estimates I’ve seen of the value of a purchaser-post on Facebook are $2-5.  So that doesn’t work.

On the other hand, if my calcs are wrong, and the economics of pay-for-share really do work, and the model becomes wide-spread, what will this mean for Facebook et al?  Will they have to enforce disclosure rules?  Do paid-for posts harm the community, or only (if discovered) the reputation of the poster?

Hey, if this model proves out, we’ll probably add it as an option in our Social Commerce Suite, too.  But what I’m really hoping is that, in the end, social commerce will be about people sharing with each other just because it’s helpful, not because they’re paid to.

As discussed in a couple recent posts (one, two), it’s much harder to get people to share purchase-related information than other types of personal news and content.  And the type of sharing you can get people to do in bulk (“contextual sharing”) is more limited than the broadcast-to-all-your-friends type that most merchants dream about.

But there’s one big exception: discounts!  Discount offers and social are a perfect symbiosis. Access to deals is the #1 reason people fan brands on Facebook (driving brands to offer more deals to get more fans).  Deal-a-day services (Groupon, LivingSocial) and private sale sites (Gilt, Rue La La) owe much of their explosive growth to the eagerness with which members share their deals.  And new services like CureBit and SocialFeet have realized that even paying customers to share purchase news with their friends doesn’t work unless you also give those customers a discount offer to share with their friends at the same time.  In a nutshell: social networking is driving discounting to levels never seen before.

But how far can discounting strategies go before full-price has no meaning any more?  Discounting has always been used in a limited way to bring in new customers and as a price-discrimination tool.  (Clipping coupons is a pain, so only people who care more about the savings than their time did it.)  But those uses of discounting are only affordable to merchants when the bulk of sales remain at full price.  Also, most customers don’t mind paying full price if just a few people, for special reasons, got a discount; but no one wants to be the only jerk who paid full price when most others got a discount.  With too much discounting, the full-price-with-occasional-discount model breaks down, and everything has to be sold at a discount.  And then the discount price has to be raised to preserve margins, so the full-price price becomes a meaningless number no one would consider paying.  And that sort of price confusion is paralyzing to buyers.

Clearly, the discount tsunami is still coming in – no one knows where the high-water mark is going to be.  But in this environment, we think it’s more important than ever that merchants continue to explore tools that help them grow without compromising margins and not just get swept along in the discounting frenzy.

Last month, I wrote about the challenges of social commerce – in particular, why it’s so hard to get people to share purchase-related information.  And I promised I’d follow up with a more optimistic post about an approach that’s working.  We call this “contextual sharing”.

Try this: Ask a random sample of people how they feel about telling their friends about recent purchases.  Most of the people you ask will probably give you an answer like this: once in a while they’ll tell some friends about some purchases, but the idea of mass-sharing their purchases is repulsive.  Now ask them how they feel about answering questions about their purchases.  You’ll probably get a very consistent response: sure, I’m happy to help; in fact, I enjoy sharing my experience.  Now try a 3rd question.  Ask these people if they’d be willing to let people who are shopping for items like ones they’ve already bought know that they are available for advice, if needed.  The answer will probably sound like this: as long as I’m not broadcasting about my purchase in a spammy or self-promotional way, sure.

This is the big idea behind contextual sharing: people will share purchase-related information when they have confidence that it will be relevant to the audience.

If you sell online, this has huge implications for your sharing strategy.  Don’t over-reach by trying to get your customers to mass-share.  Instead, start by asking for contextual sharing.  You’ll get a much higher sharing rate, and you can always put the request for a mass-share at then end, to catch that small % of customers who will participate.

Here’s some data from our experience running the TurnTo Purchase Sharing application, which uses a contextual model, on several dozen websites spanning a broad range of verticals for over a year. The system opens an overlay box on the order confirmation page (ie immediately after purchase) that looks like this:

15% of customers click “Sure” (!!).  Then the system asks for an answer to the question “Why did you choose this?”

About 1/3 of the people who clicked “Sure” also add a comment.  That means that about 5% of all items purchased are getting one of these check-out comments attached, along with permission to show that comment to other shoppers. Finally, the system offers shoppers the opportunity to post that comment to Facebook and Twitter.  The rate there is much lower.  But by having asked first for the contextual sharing permission, the store at least got that.

I was recently on a Social Commerce panel (photos here) for Social Media week hosted by Digitas in NYC.  (Thanks Beth McCabe, Noah Mallin, Jonathan Burg, and fellow panelists Matty de Castro of Facebook and Bob Tuttle of 8th Bridge!).  One of my fellow panelists put up a screen shot of the Levi’s Friends Store as an example of Social Commerce and provided an opening I couldn’t resist.

Look in the lower right: Levi’s has 2.9m Facebook fans.  That’s 2.9m people who have agreed to allow Levi’s to send them messages in Facebook.  Not bad!  Now look at the Original 501 Stonewash jeans.  450 people have liked this.  Only 450 people.  How many people do you think own these jeans?  And Levi’s Friend Store was Facebook’s poster-child ecommerce partner when they launched the Like button.  In fact, for several months, Levi’s entire online store was the Friends Store.  (Even now, the Friends Store is one of the main menu options.)  So it’s not like the feature was hidden.

Thank you Levi’s for providing such a clear illustration of the main challenge of Social Commerce.  What’s working well for Levi’s is leveraging Facebook to enable dialog between the brand and their customers.  That’s the 2.9m fans.  But that’s not Social Commerce, it’s Social Media Marketing.  Social Commerce is encouraging commerce-related conversation between customers.  That’s what the Like button next to the individual products is for.  That’s the 450 people who have Liked the 501 Stonewashed.  And that’s what’s not working.  (You can define the terms differently if you like – I don’t really want to provoke an argument about definitions; the distinction between customer-to-brand vs. customer-to-customer is what’s important.)

Why is it so much harder to get people to share product and purchase information with each other than it is to get them to accept marketing messages from a brand?  The biggest reason is this: the stigma against shilling has not disappeared just ’cause now we share on social networks.  Any time a statement can be (mis)interpreted as “trying to get your friends to buy something”, all sorts of alarms go off.  Not to mention all the other baggage that goes along with sharing on wealth-related topics.  (She can afford that?!  Is that the best he can afford?!)  Content sharing on social networks has been a runaway success.  But when the subject of the sharing is product/purchase/commerce, the sharing rate falls off a cliff.  (Acknowledging some exceptions: discount offers, especially deep ones, get shared.  And commerce objects of exceptional interest get shared – I’d argue that this is better understood as content sharing, tho.)

Does this mean that if you sell stuff, you should forget about trying to connect your shoppers and your customers with each other?  No way.  You can try the discount-offer and too-cool-not-to-share end-runs.  You can even go the full-on viral content route where your brand/product message is just a low-profile passenger.

Or you can try a radically different approach we call Contextual Sharing.  More on that in a later post.

You’ve implemented Facebook “Like,” have a fanpage, post on Twitter, but haven’t seen a real return on using Social Networks?

Register now for TurnTo’s 45 minute Webinar taking place on Wednesday September 22nd at 2:30PM Eastern.  We’ll take a look at how you can increase conversions 2-5X above your baseline by providing your shoppers with a way for them to connect with people they know and other shoppers directly in the shopping cycle.  See why over 50 online stores have implemented TurnTo’s powerful and lightweight Social Commerce Suite.

Simply email bnettle@turnto.com to register and we’ll send details on the upcoming webinar.

We look forward to seeing you at the webinar!

Amazon has just hooked up with Facebook to add social shopping features powered by the shopper’s Facebook friends list.  (NY Times article. WSJ article.)  My guess is that this will prove to be the watershed moment for social commerce.  Where Amazon leads, others follow.  Amazon pioneered customer ratings and reviews, which are now found on commerce sites across the web.  Amazon pioneered community cross-sell tools (“customers who looked at this also looked at that”, “customers who bought this also bought that”), which are now provided to online merchants by at least half a dozen vendors.  And while Amazon may not have pioneered the integration of 3rd-party social graphs into online stores (we’ve been at this for a few years), the ecommerce world is likely to take its cues from Amazon in this area, too.

Here’s what it looks like on my Amazon profile page:

And this is just their initial feature set; lots more must be just around the corner.  Merchants interested in the potential of “on-site social commerce” should check out what Amazon has done here and keep an eye on where they go next.

(For those interested in archeology: before Facebook built the one-social-graph-to-rule-them-all, Amazon had social-graph-building aspirations of their own.  They called it “Amazon Friends and Interesting People.”  Dig here to learn more.)

If you sell online and haven’t seen TripAdvisor’s new Facebook integration, check it out.  It’s a great example of what the future of social commerce is going to look like.  Go to any destination page on www.tripadvisor.com and look for the blue box to the right of the image.  Here’s what it looks like for me for Zurich:

There are three aspects of this application that point the way to the future.

Context.  You could get the information displayed here – which of your friends has been to a place you’re researching – by going to the TripAdvisor Cities-I’ve-Visited app.  But would you?  Here, TripAdvisor is delivering the social information in the context of your normal research path, rather than forcing you to detour to get it.  That makes you much more likely to consume this influential content.  For online merchants, context is just as important.  Shoppers do product research on product sites, not on social sites.  So it’s more powerful to bring the social references into the normal shopping path than it is to bring product information into the social environment.

Data source integration.  This tool combines two data sources – one from TripAdvisor and one from Facebook.  TripAdvisor has a database of places that many of their members have been.  It comes from a popular app they built a few years ago called “Places I’ve Visited”.  These data are combined with Facebook’s who-knows-who data, enabling TripAdvisor to tell you which of your friends have been to a particular place.  (Note: this has nothing to do with Facebook’s “Like” functions!)  As a merchant, you have a database just like TripAdvisor’s that you can leverage in a similar way: your purchase history data.  A mash-up between this data set and friend lists from Facebook (and other sources) is the key to delivering socially-enhanced shopping experiences.

Message-based communication.  The backbone of social commerce, to date, has been customer reviews.  Though highly effective, they’re not really all that social.  The shopper who posts a review never knows who will read it.  The shopper who reads a review can’t reach the person who wrote it.  There’s no direct communication between shoppers.  But in this TripAdvisor app, a visitor is offered a channel to connect directly to people with knowledge of the topic.  This is not passive Q&A where questions just hang around waiting for someone who can answer to happen by.  This is a message-based model where shoppers can actively reach out to one another.  My question about Zurich is not just posted on the Zurich page, it’s sent to the inbox of people who have been to Zurich.  That deepens and extends the engagement of the current visitor, who is called back each time their question is answered.  And it re-engages the past visitor who receives and answers the question.  This direct, message-based communication is also in the (near) future of social commerce.

It’s a big day at TurnTo: we’re introducing our Social Commerce Suite.  (Yes, we know that it’s ambitious to call it a “Suite” with just 2 products – please humor us. Also, there’s more in the pipeline…) Official press release here.

So what’s new? 1. We’ve done a nearly complete overhaul of our current product, now branded “Social Merchandising” and 2. We’re introducing a new product called “Social Purchase Sharing”.

Social Merchandising. We’ve made improvements top to bottom.

• Shoppers who open the widget but don’t personalize it by checking for friends will now see a range of other customers and their purchases designed to give the site that buzzing busy-store feeling and to encourage consideration and purchase of more items. (The goal is to address one of the big limitations of the shopping online: lots of stuff in the stores, but no people.)  We’ve built a ranking engine that selects which customers and which items to show, ensuring the greatest relevance given limited data.
• We’ve made the value and process of personalizing the widget a lot more transparent to the user, so many more of those who open the widget will go the next step and personalize it to see their own friends in place of those the system picks. Underlying this is a simplification of the sharing rules to a vanilla Twitter-style “follow” model. (See our last post about the importance of simplicity when it comes to privacy and sharing.) We’ve also switched to delegated login for most of the friend list sources we support, including the newest Facebook protocols. (The short explanation: it’s better.)
• The widget now shows big, attractive product images throughout, so not only are shoppers seeing which of their friends also shop at that store, the purchases those friends made look particularly inviting.  Good for cross-sell and order size improvement.
• The comment mechanism has been redone to both capture more input from buyers and to show it more visibly to shoppers.
• We’ve made significant enhancements to the guts of the system to provide greater speed and reliability. These include use of a Content Delivery Network as well as a range of server-side caching and summarizing strategies. The design point was to be able to support the largest ecommerce sites out there.
• We’ve added new tools for optimizing the button that calls up the widget. It doesn’t do stores any good to have a fabulous social merchandising tool if only a few shoppers use it. We now provide a range of more interactive button designs as well as tools for doing rotation tests (randomized A/B/C tests) of alternatives. In its initial use, we’ve already seen large engagement rate improvements.

In a nutshell: you have to see it. So here’s the first screen shot we’ve released:

Social Purchase Sharing. Our partner merchants have been telling us how valuable it is when a customer posts to their social network (most often Facebook and Twitter) about their purchase. So we’ve added a simple tool to significantly increase the amount of purchase sharing online stores can generate. It’s an overlay that appears on the order confirmation page right after a purchase and makes a clear, persuasive appeal to share. The permission obtained from the buyer is also used to power the Social Merchandising widget, so the “sharing” appears both on the social networks and on the store site itself. Here’s an example of the overlay – just picture it on top of your order confirmation page. (See also our blog post on “Like” vs. “Bought”.

The TurnTo Social Commerce Suite will be generally available to online retailers at the beginning of Q3, 2010. If you are in Chicago this week for the Internet Retailer show (IRCE), please come by booth #431 and we’ll give you a full demo. If you’d like more information on the thinking that went into these products, please have a look at the white paper we just released: Onsite Social for Online Commerce.

In short: keep it simple.

In the first version of TurnTo, we were determined to set a gold standard on privacy control.  We provided a multi-level model for authorizing purchase information sharing.  We had forward and reverse models for specifying friend relationships.  We let users create groups of friends then share with groups while excluding individuals or sub-groups.  We provided time-based controls that let users specify review periods.  And that’s just the stuff we implemented; our plans went even further.

You know how that movie ended: no one used these functions.  And we’ve been stripping them out of the system one by one ever since.

Here’s what we learned: when it comes to sharing purchase information, there’s them that do, and there’s them that don’t, but there’s no one in the “I would if only I had more granular controls” group.  The best way to serve your users is to keep the model very simple so that it’s obvious at first glance what sort of information sharing is going to happen.  It’s OK to be very open, very restrictive, or anywhere in between, as long as the rules are obvious.  Granular controls don’t help you increase your audience. At best they’re ignored, and at worst they cause confusion and bad feeling.

In contrast, Facebook has been moving in the opposite direction.  They wanted to make their environment more open to enable functions that would be valuable to their members.  But they felt a significant part of their membership might prefer the old, more restrictive model.  So to keep everyone happy, they added granular privacy controls.  “Everyone can have it just the way they want it.”  But in trying to keep the old and the new at the same time, what used to be simple got complicated.  And that hasn’t worked.  People get their settings wrong and are surprised.  People feel duped if their settings change without warning, or they feel coerced if pressed to change settings they were happy with.  Or they feel burdened by having to learn complicated rules for something that used to be simple. Or they lose confidence in the system and back away.  And what about those conditions where A meant to share only with B, but B shares everything with everyone, and A didn’t see that one coming?  Now Facebook has added the Bandaid of bundling those granular controls into higher-level preferences.  “You want it small, medium, or large?  Don’t worry about the details.”  That might help – we’ll see.

But if Facebook had asked us, we would have told them this: it’s OK to change, even radically.  (You of all companies know that and have shown the guts to do it.)  Decide on the basic approach to privacy you think is best for your users and your business.  And throw everything else out.  Some users will gripe about the changes (like they did when you introduced the news feed).  But then they will see the wisdom of your new model, their behavior will adapt (some may share less, others more), and they will thank you thank you thank you for keeping it simple.

First: we wholeheartedly agree with the ideas underlying Facebook’s big announcements today. People want to be able to interact with their friends on sites all across the web, not just within Facebook.  And sites don’t all want to have to become Facebook apps to support this.

TurnTo has been working to enable contextual delivery of social networks on ecommerce sites since our founding in 2007.  And we’ve proved that the benefits for both shoppers and merchants are significant.  So we applaud Facebook, appreciate the validation that their heading in this direction provides, and are already hard at work incorporating their new API.

We also think that to derive maximum advantage from an Onsite Social strategy, ecommerce sites should not rely exclusively on the new Like-based functions that Facebook is providing, but should – more importantly – leverage their purchase transaction data.  Here’s why:

It’s useful for your shoppers to see which of their friends know about your store and the products you sell.  Facebook’s API takes care of the problem of determining who you shoppers’ friends are.  But how do you determine what those friends know about?  Facebook’s new Like button lets shoppers register a connection to items on your store that they, well, like.  But Like does not equal know-about.  And many people who buy from you – and therefore REALLY know about you and your products, will never click Like.  In other words, there will be loads of false positives and false negatives.

If you were a content site, this might be the best you can do.  But as a commerce site, you have a unique asset: the purchase transaction.  You already have a massive set of people who really do know about you and your products, and the list grows every day.  They’re called: customers.

So go ahead and use the new Facebook plugins.  But also, and more importantly, leverage your transactional data to socialize the shopping experience on your site.  That’s where the big opportunity lies.

Business Week just published a piece on the potential for Facebook in online shopping.  They focus on the role of Facebook Connect in enabling shoppers to post questions to their Facebook network before making a purchase.

It makes sense that this is the primary way Facebook Connect has been used so far in online shopping, since it’s the easiest to implement.  But it’s just scratching the surface.  The real potential is in bringing the social network to the shopping site (not the other way around).

For one thing, many people are hesitant to blast questions that they know are only relevant to a small portion of their network out to everyone.  No one wants to be a spammer.

Also, most shoppers don’t think of Facebook as the place to go when researching a purchase.  The primary research destinations are merchant sites and content sites that address the product category.

Combine those two considerations and what you get is a requirement for a system that runs on the merchant (or content) site and tells a shopper which particular people can help them with their purchase decision, so only relevant people receive the shopper’s questions.

If you sell online and this makes sense to you, check out the way TurnTo’s merchant partners are using the TurnTo system to achieve exactly this.  www.turnto.com/partnerlist.

I had fun during the Internet Retailer Conference this week chatting with Ina Steiner, Editor of the AuctionBytes blog.  We covered a lot of topics in a short time.  She has posted the conversation as a podcast.  Enjoy.

Here’s what Citysearch CEO Jay Herratti told the New York Times last week regarding their recent trial of Facebook Connect:

In the four months the site [Citysearch] has been testing Facebook Connect, 94 percent of reviewers have published their reviews to Facebook, where an average of 40 people see them and 70 percent click back to Citysearch. That has translated into new members: daily registrations on Citysearch have tripled.

If you are an on-line merchant, don’t leave all the Facebook Connect fun to the publishers!  With tools like TurnTo, a Facebook Connect implementation is far easier and quicker than you might imagine.  And results like those from Citysearch show the benefits can be dramatic.

Last year, ecommerce sites that sell to “grown ups” sometimes told us, “We don’t need a social shopping strategy – our customers don’t use social networks.”  That was last year.  The landscape is changing at an incredible pace, and customer profiles in 2009 are going to look quite different.  Take a look at this article about the growth rate in the over-55 Facebook population.

http://www.bizreport.com/2009/02/is_facebook_going_gray.html

Here’s our second presentation from day 2 at the OnMedia conference.  This one is a straight-up product demo and company backgrounder without the “theory” from yesterday.  The TurnTo part runs from min. 36-46.  (As with yesterday’s, we’ll swap in the individual video once we get it from the conference.)

We just rolled out Rave.  If you’ve had a particularly good experience with a product from a TurnTo network site – the sort of experience you’d normally tell your friends about – rave it.  Your TurnTo friends will see your rave in their TurnTo news feed, and you can also push it out to your Facebook friends.  (Coming soon: you’ll be able to push your raves out to other networks, Twitter, and the like…)  Other people can see your raves, too, but we don’t push it to them, and they don’t see your name as the author.

How come only “rave” and not “pan”?  The main idea behind rave is to make it easy for you to bring something to the attention of your friends that they might find valuable.  Getting warned off of a bad product is useful mainly if you were already considering it.  There’s no need to tell me not to get something I didn’t want anyway.  But getting alerted to something really special can spark a brand new idea.  Plus, we wanted to focus on the positive.  And a lot of our partner sites already have tools for collecting ratings and reviews, so we felt it was more important to focus on the communicating-with-friends aspect than on collecting scores and feedback.

We’d love to hear what you think.  Please drop us line.

The New York Times ran a piece today heralding the imminent arrival of Facebook Connect – significant as an indication of the huge expected impact of the feature.  My guess is that for brands and online merchants planning their social commerce strategy, the anticipation of Facebook Connect will be matched by an equal measure of head-scratching about how to make the best use of it.

Its predecessor, Beacon, had significant flaws.  But for merchants, it also had a particular beauty – clarity of purpose.  It did just one thing (sending “stories” to their customers’ Facebook pages so friends could see what those customers bought).  And it provided all the infrastructure needed to do that.  Just pop a bit of code here and there, and you were up and running.

Facebook Connect, on the other hand, is a tool kit which can be used in many possible ways.  In addition to posting stories back to Facebook, it offers the ability for shoppers to bring their Facebook friends with them to the merchant’s site.  Sounds exciting, but what does that really mean?  What features and applications should sites build around that capability?  And where does the technology to take advantage of this potential come from?

My belief is that the killer app for Facebook Connect for online commerce is going to be “trusted reference systems”.  If you sell online, and all-of-a-sudden you can know the friend-network of your shoppers, what is the most powerful use to which you can put that information on your site?  It is: to tell your shoppers what their friends have bought from you, while they are shopping.  Shoppers who see that friends buy from you are going to be more likely to do so, too.  They’ll get ideas from seeing what their friends have purchased, so they’ll buy more.  And they’ll be able to see who among their friends they can turn to for advice if they have questions, so their whole shopping experience will be improved.

We’re on the brink of a new phase in online commerce where brands and merchants of all sizes will be able to put applications driven by social graphs on their sites.  For those who take advantage of this opportunity, the potential to create value for their business is tremendous.  (Not to be coy, at TurnTo, we are excited to be the leading provider of turn-key trusted reference systems that make it a snap for sellers to add these social commerce features to their sites.  If you are wondering what Facebook Connect can mean to your business, we’d like to talk to you; please drop us a line.)