Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR) are both experimenting with on-site and in-app purchase options that would allow people to buy advertised products without having to navigate to another website, reports Julia Boorstin for CNBC. Twitter’s Buy Now button, powered by e-commerce site Fancy, debuted earlier this month and Facebook announced its Buy button in a July 17 post, but it’s currently limited to small and medium sized businesses in the US.
Tracking purchases improves service for advertisers
While you can expect both companies to take a cut of any sales that pass through their respective platforms, that doesn’t mean that you have suddenly become their primary customer. Facebook Inc (NASDAQ:FB) said that it “built this feature with privacy in mind,” and that it won’t share people’s credit card numbers with advertisers, but that’s not really the point. Facebook shares online activity with marketers to help them pinpoint their target audience and rolling purchasing history into the data will make it even more valuable.
An on-site Buy button also removes some of the friction from online sales, making impulse buys that much easier. Facebook Inc (NASDAQ:FB) is actively experimenting with emotional manipulation as we found out earlier this month, and there is no reason to doubt them when they say the study was done for product improvement. It’s just important to remember that the product is an effective marketing platform, not a place to catch up with friends.
Privacy concerns could hold back Facebook purchases
Facebook Inc (NASDAQ:FB) could find that years of shifting, opaque privacy policies could finally start to hurt its business. It has already used people’s images to advertise products without their permission, so how long could it really resist before it starts revealing people’s product history? Even if they start out by protecting peoples’ anonymity, a little box with a list of friends ‘who bought this item’ seems inevitable.
But in-app sales are probably even more important for Twitter Inc (NYSE:TWTR), which continues to lose money despite its popularity (down $132 million in the last quarter alone). Its stock price has recovered from its May lows, but when Twitter reports earnings next week investors will want to know what it’s doing to monetize its platform and we can expect to hear more about direct sales and other changes to its advertising products.