Shop the Feed – How Facebook is Shaping Social Shopping: A Recap From Advertising Week New York

Krista Kauppinen

Marketing

Earlier this year Mary Meeker’s Internet Trends Report highlighted how the Facebook Newsfeed is becoming a targeted storefront with curated, browsable and shoppable content. Our Advertising Week New York panel brought together three of our customers to discuss the transformation with our CEO Kristo Ovaska.

Today, instead of window shopping along Fifth Avenue, people can discover relevant products from the comfort of their home by shopping directly from Facebook ads. Recreating the storefront experience online is becoming increasingly popular, and Facebook is leading the way by releasing new ad formats and features almost on a weekly basis, with Snapchat and Pinterest following suit.

The panel was moderated by our Founder and CEO, Kristo Ovaska and panelists included:

  • Josh Gray, Senior Director of Growth for Reformation, a sustainable fast fashion brand. Originally an ecommerce, the brand has now opened eight retail locations.
  • Jordan Deodato, Head of Growth at BARK, creators of the monthly dog subscription service Barkbox. His team is in charge of all points of acquisition from channels to onsite behavior and content.
  • Anne Thouas, Head of Awareness Marketing at Wonderbly, formerly known as Lost My Name. They sell personalized children's books and have sold nearly three million products since 2012.

From Newsfeed to storefront – What has the evolution been like and how far are we in the process?

Great ad units for brand and product narratives. Sometimes a single image and copy isn’t enough to convey the message. Barkbox is a company that sells experiences through curated and themed monthly boxes as opposed to individual products. For them, running appropriate ad formats like slideshows, videos and Canvas ads to explain their product offering has been a great awareness driver. They’ve already been using Canvas ads like a landing page, taking consumers one step closer to purchase. Jordan Deodato of Barkbox speculated that Facebook may even roll out solutions that allow consumers to edit their shopping carts and even buy on the platform in the future.

Wonderbly has been relying heavily on Facebook since 2013 to grow their business. So far they've mostly used Link ads. As competition on the platform grows, they’ve been testing out other ad units not to fall behind on their ad performance. Wonderbly is a company built on stories; the storytelling aspect of Facebook's new ad formats is compelling – especially since it's hard to paint the whole picture of personalized children's books with a single image.

More of the journey happens on Facebook. As Facebook's ad units become more sophisticated and engaging, the path to purchase happens more and more on the platform as opposed to the homepage. Anne Thouas stressed that while from a data and retargeting standpoint, you'd rather have users click through to your site, Facebook's new formats such as Canvas are performing so well that the higher engagement makes up for the shortcomings in tracking.

The development pace is accelerating. Josh Gray recounted the short history of Facebook advertising: from buying Instagram to launching their own ad exchange back in 2012 and rolling out Lookalike targeting in 2013. The real game changer for retailers such as Reformation was the launch of dynamic product ads in 2015 – and the platform has continued to develop quickly ever since.

The turnaround from Canvas (Feb 2016) to Collection Ads (March 2017) was fast. Collection repackaged the most engaging elements from Canvas ads as a storefront, making the experience more shoppable without having to revert to a full screen browsing mode. Gray explained that Reformation is now looking to capitalize on these engaging ad units by taking shoppers further along the funnel.

The variety of ad units grants more freedom to advertisers. Deodato said it’s important that Facebook keeps rolling out new of ad units as you don’t know what will work for your brand and products without testing. Barkbox for one has taken a nimble approach to Facebook advertising by testing up to ten different formats for a few months to single out high-performers. This helps them make the most of their budget without relying too much on a single ad format.

From trends to practice: how can ads feel more like a shopping experience?

To explore the creative examples presented during the panel, follow the embedded links in the text.

  • For Reformation, it’s all about highlighting the product in both acquisition and retargeting campaigns. Carousels perform well as it allows creatives to really shine and users can browse through multiple products similarly to an online store. As for more immersive examples, this Canvas ad combines photos and videos that showcase their recent wedding collection.
  • Barkbox admits that much of their marketing success is due to all the cute dogs in their ads. They run a lot of user generated content, like in this slideshow. This Canvas on the other hand includes an influencer video where a dachshund ‘unboxes’ its new Barkbox.
  • Advertising can also influence website design, according to Barkbox's Deodato: “Canvas has been so successful for us as an ad unit that our development team is now recreating the Canvas experience and layout on our mobile landing pages. It’s always nice to bring these kind of ideas to the table as a marketer.”
  • Link ads have historically been their best performing ad unit for Wonderbly. While Carousel didn't perform as well for them, they found other units that did; they recently tested Slideshows (videos created automatically from still images) and found that they performed even better than identical videos in a head-to-head test.
  • “When you’re not on the development side of your ecommerce business and find your site speed isn’t 100%, it can be a little frustrating.” Thouas admitted. Facebook's offering can double as a workaround for advertisers. By using their best performing Link ad as an entry point, Wonderbly recreated their homepage as a Canvas ad – only faster. This way, users were less prone to bounce because of load speeds and engaged directly in the ad, instead.

Many advertisers hesitate running the more advanced ad formats because they find the production arduous. How to get started?

Not as time consuming as you might think. The panelists pointed out that building new landing pages actually takes more time than creating a nice Canvas ad experience. “It’s sort of like having your dev team build a CMS tool.” says Deodato. Facebook Marketing Partners like Smartly.io make the process even easier. They allow advertisers to pull existing assets into new ad units, copy new ads effortlessly, preview ads and test variations. This allows you to get started faster, without the time constraints involved in having to work cross-functionally.

There is an opportunity cost to not testing. Start out by building new ads like Canvas with your existing creative assets. If the performance is there, have your creative team design new content specifically for these units. “Don't let the lack of resources prevent you from testing out these things. Slideshow has turned out to be our best performing new ad unit.”, says Thouas.

Be brave. “Initially you'll have to get over the fear and just go build one. After you see the performance come through, then it almost becomes contagious.” Gray admits. He advises advertisers to encourage their teams to include these ads in the mix and see them as an opportunity. Adopting newer ad formats levels the playing field and gives smaller brands and companies the chance to be more relevant and competitive.

Beyond Facebook — how are you leveraging digital storefronts on other channels?

Pinterest can be effective. Wonderbly mentioned that while Pinterest makes sense for their demographic, it doesn’t offer the same kind of targeting, reporting tools, nor reach in terms of countries or users.

Google Shopping works midfunnel. This channel can be effective when the shopper is already in the consideration stage. The challenge is that people don't search for certain types of products such as personalized children's books. On Google Shopping it’s also hard to stand out as an icon among many other icons for now, it leaves little room for differentiation.

Instagram Stories is growing. Gray of Reformation thinks that Instagram has been on fire for last year and a half with Stories running the show. Reformation has invested heavily in Instagram advertising and enjoying high-engagement and growth on the platform.

The future of Amazon will be interesting. “I think it’s something very similar to Google Shopping today, that’s probably the space Amazon wants to be in.”, predicts Gray.  “They’ve been very silent. Everyone is talking about Snapchat’s growth and how they’re over 1 billion in ad revenue, but actually Amazon is at almost 2 billion.

Facebook owns audience targeting. All panelists agreed that while Snapchat and Pinterest ad units can be engaging and attractive, Facebook offers way more powerful targeting tools. Advertisers have been quick to leverage Facebook’s audience targeting innovations and are wondering what the next "Lookalike" will be. They’re continuing to test the other channels but still waiting for bigger breakthroughs there.

Some brands say it’s difficult to convert content into direct sales from shoppable ads. What’s your take? How do you measure impact?

Wonderbly’s performance analysis is based solely on cost-per-acquisition (CPA). They use the U-curve attribution model (40% for first click, 40% for last click and 20% spread across other touchpoints). That has helped them further validate that Facebook is their most effective acquisition channel. They’re really strict in terms of different ad formats: Slideshow and Canvas are in direct competition with Link ads – if they don’t perform, they're turned off.

As a subscription service that’s been around 5-6 years, Barbox's lifetime value is quite predictable. They know what day-to-day success looks like in terms of their CPA. Their channel managers are instructed to spend as much as they can while maintaining a certain CPA. At the end of the month, they compare channel performance and use similar attribution to Wonderbly to gauge what works and where to move budgets across channels to achieve company goals.

The biggest challenge for Reformation internally is figuring out how to measure video performance consistently across channels. Ultimately, they’re looking at return on investment: CPA for new customers and return on ad spend on retargeting campaigns.