Is This New Facebook Strategy a Winner?

Facebook (NASDAQ:FB) employees were rewarded for passing the loyalty this week. Shares are up over 23 percent over the last five trading days, pushing toward their highest level since July. Investors may be finding some new faith in the company now that a major lockup is in the past, and speculation once again focuses on growth.

On that front, Facebook’s latest and greatest tool offers retailers a means of tracking purchases made by Facebook users who have viewed their ads. Significantly, the system remembers what ads a user clicked on for weeks. Being able to view conversion rates over a period of time like this will be significant for marketers who want to track whether their campaigns are immediately catalyzing sales, or slowly building their brand.

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Google’s (NASDAQ:GOOG) advertising network has been a favorite among marketers looking to immediately produce sales through one-off deals or promotions. The power of search advertisement is in how directed it is. If somebody searches Google for plane ticket prices, Google can put airline advertisements right in their face with some certainty that’s what the user wants. However, if somebody is just talking about traveling with a friend on Facebook, there’s no guarantee that they would respond to airline ads through the social network.

The new tool will give marketers the ability to test exactly this sort of thing. Particularly interesting is how this sort of tool might be used in conjunction with other Facebook monetization efforts, such as Facebook Gifts. Earlier in the week, the company announced a new battery of partners for its gifts program, which allows users to give gifts directly to friends from their time lines. Previously only available to a small group of pilot users, the service was rolled out to millions more.

The service has some advantages over other gifting mechanisms like the one Amazon (NASDAQ:AMZN) offers. Facebook already prompts users about upcoming birthdays and does not require the person giving the gift to already know the recipient’s mailing address. Information like that, as well as variable aspects of gifts like flavors for cookies or colors for teddy bears, can be tweaked by the receiver.

Facebook is in the business of connecting advertisers to potential customers. This job only gets easier as they increase the capacity for users to shop through their site. It’s likely that data from the gifts program will roll into better conversion rates for marketers who utilize Facebook’s newest tool set.

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