Wednesday, October 10, 2012

Facebook set to Charge Businesses for Offers Service

By James Kenny

Facebook To Charge Businesses For Offers Service
Facebook, the world's largest social media giant, has announced that they will soon begin to charge businesses that want to take advantage of their "Offers" service. This service is one that Facebook introduced in early 2012, which allows people to receive deals from businesses, such as coupons, that can be used at their locations. From the beginning this has been a free service that many businesses have taken advantage of. Facebook, however, has decided that it is now set to charge $5 on ads that will be used to promote "Offers" in order for businesses to be able to use the service.

Facebook has decided to make this move, in particular, because of the increasing pressure that has been put on them since they went public on May 17, 2012. With stock prices continually dropping, a loss of 40% in stock value since they went public, Facebook is looking for new ways to increase its revenue. Facebook has not been able to turn its massive reach into increased profits yet, mainly because businesses have been using the "free" tools it has offered to advertise.

While the effect of having to now pay to use the "Offers" service is sure to drive some businesses away, there are some benefits that may come along with the revamped service. Facebook's director of product management for advertising and pages, Gokul Rajaram, made a statement regarding the revamped service. "In the past, some Facebook Offers have not been relevant to all users, partly because some people saw deals in their News Feeds from merchants located far away from where they live; the requirement to pay for related ads will focus merchants on who and where they want the offer to reach". Facebook will also finally allow "online-only" businesses to use their "Offers" service. This has traditionally been reserved for businesses with a physical location, but the fact that it is now expanded to online businesses shows Facebook's desire to grow in this sector.

Whether or not businesses will quit using the service because it is no longer free, or whether they will embrace it because of the increased reach of their offers remains to be seen. One thing for certain is that Facebook is hoping this branch of their business will grow, and that business will not only reach their customers more effectively, but increase their profits as well.

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