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Facebook Flexes Its Location Marketing Muscle

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Facebook has been on the defensive for most of 2018. The company has struggled to fight its way out of one bad story after another, including a dramatic drop in its stock value in recent weeks after the world’s largest social network underwhelmed investors with its latest quarterly earnings results.

But Facebook is also improving in ways that will serve both its users and brands well, including businesses at the local level. One example is the rise of Facebook Marketplace, which is building momentum as a destination for businesses to conduct local commerce. Another is the launch of Facebook Local, which makes it easier for Facebook users to find restaurants, bars and other places as well as reviews from their friends. Brands should take advantage of the tools that Facebook is developing to strengthen location-based marketing.

The Growth of Marketplace

Facebook originally launched Marketplace as an answer to Craigslist back in 2007. Marketplace was supposed to be a destination for the growing Facebook community to post classified ads for jobs, houses for sale, and miscellaneous products. Facebook kept Marketplace going for years before shutting it down quietly.

But even though Marketplace shut down, Facebook users kept searching locally for things to buy and sell. From 2011 to 2015, the number of Google searches containing the phrase “near me” increased 34 times. And people were doing those local searches on Facebook, too. In fact, people were using Facebook Groups as quasi-marketplaces without any support or encouragement from Facebook. Members of groups for parents might tap into their group to buy and sell used toddler clothing or toys. It made no sense for anyone to hop on to Facebook and search for “baby clothing near me” as they would Google, but they might want to do so in a special interest group of highly engaged, like-minded parents.

Facebook took note of the burgeoning local commerce going on in its Groups and decided to re-launch Marketplace in 2016, giving the section more prominent space on users’ apps. This time around, Facebook capitalized on the surge in local search popularity by giving Facebook users one convenient place to find what they wanted. Within a few years, more than 550 million people across 51 countries were using Marketplace each month (compared to 55 million people who visit Craigslist monthly).

But local search intent tells only half the story. The other key to the growth of Marketplace is the way Facebook has gotten brands involved. To wit: in May 2018, Facebook opened up Marketplace to home services businesses. So, if a user needs services such as general contracting, they can find options inside Marketplace. Facebook is partnering with sites such as Handy, HomeAdvisor and Porch to act as a filter for different services. The third-party sites do all the heavy lifting, aggregating home services businesses with details such as customer ratings. Facebook relies on Marketplace to make it easier for users to search their options in one convenient place.

In launching Home Services, Facebook’s vice president of Marketplace, Deborah Liu, wrote, “More people ask for recommendations related to home services on Facebook in the US than any other topic. Since the beginning of the year, millions of people have asked their friends for suggestions related to home services, such as house cleaners, plumbers and contractors.”

Facebook does not collect a cut of revenue from products sold on Marketplace. But Facebook is monetizing Marketplace: Facebook recently announced a product that makes it possible for brands to advertise in Marketplace.  Already businesses are benefiting, according to Facebook. As Facebook noted, FabFitFun, a women’s lifestyle subscription box and media company, increased its subscription base using ads on Facebook, with Marketplace ads generating a 2.2X return on ad spend.

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Facebook Local

Facebook has also taken a run at location-based commerce by stepping up its presence in dining and entertainment. In October 2017, Facebook launched the ability to order food for delivery through Facebook. Then Facebook rolled out Facebook Local, which makes it possible for users to more easily search for restaurants, bars, and other establishments and see information such as customer ratings/reviews. Facebook Local is essentially a reboot of Facebook’s standalone events app. Befitting the mobile nature of event-based search, the experience is available through an app.

And Facebook is serious about making its app a Yelp killer. Using Facebook Local, users can see not only deep information about destinations, but also data on places where friends visit, events that are trending, and information on users’ activity calendars. Users can reset the app when they are traveling, as well, so that the app is useful no matter where they are.

With Facebook Local, Facebook is getting more savvy about applying the social graphs of its users in a way to provide a utility to other users. Facebook is not only making itself a stronger alternative to Foursquare and Yelp – it is also strengthening its position against Google, which recently launched Google Maps functionality that makes it easier for people to plan activities and read each other’s reviews.

The launch of Facebook Local also rebuts the contention that organic content on Facebook is dying. True, Facebook’s algorithms are rewarding paid content, but organic content such as your location data and customer reviews/ratings are critical as Facebook makes itself a stronger destination for search.

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My advice to brands:

  • Audit the content you publish on Facebook. How accurate is your location data, and how compelling is your deep content, such as photos, videos, and descriptions of your products and services?
  • Manage your ratings and reviews like an asset. Ensure that they are up to date and that you are responding to customers. Encourage customers to review you, as the more reviews you have, the more credible your business is.
  • Watch the evolution of Marketplace as it expands into multiple verticals beyond home services. Take advantage of the advertising tools Facebook is providing. Even if you are not in home services, it might make sense to advertise if you offer adjacent services and products such as home furnishings.
  • For multi-location brands, you should leverage one single integrated platform that allows you to streamline management and aggregate reporting and analytics by region, category, state, city, location, etc.

To be sure, Facebook is going to continue to deal with a tough year in Wall Street’s eyes. But for location-based businesses, Facebook is looking better and better.

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