Facebook Application Could Help Merchants Sell Online
Wednesday March 12nd, 2008 / 23h33
SAN FRANCISCO (AP)--Facebook Inc.'s popular online hangout so far has proven to be a better place for promoting fun and games than peddling products. But a new application aims to inject more commerce into the social playground by paying Facebook members who help merchants sell to their friends. The program, called Market Lodge, revolves around the notion that consumers are more likely to buy merchandise or services recommended by someone they know and trust. Market Lodge, made by a startup called bSocial Networks Inc., will pay Facebook members a 10% commission on all sales made on their recommendations. Facebook tried to capitalize on the bonds of friendship last year by introducing a marketing system that includes broadcasting product endorsements among people who know each other. The strategy hasn't paid off yet, largely because many of Facebook's users rebelled against a feature called "Beacon" that tracked and shared information about their purchases and other actions made on other Web sites. Spurred by the backlash, Palo Alto, Calif.-based Facebook now allows its users to turn off Beacon. Conifer, Colo.-based bSocial is betting that Facebook's roughly 67 million users will be more receptive to an approach that dangles a financial incentive for participating. Facebook members who decide to use Market Lodge can customize their own stores, selecting from more than 1,200 products sold by about 50 different merchants. Once the personal store is set up, Facebook users can then invite others in their network to check out the stuff they are recommending. Market Lodge users can make purchases from their own stores and still qualify for the 10% sales commission. All the inventory, order processing and delivery arrangements are handled by the merchants - just as they would be for any other sale. "We think this could be very lucrative for Facebook's members," said bSocial co-founder Sue Spielman. More than 100 people have signed up for Market Lodge since it quietly rolled out last week. For now, Facebook won't receive a cut of the sales made through Market Lodge, but bSocial Networks eventually may consider sharing revenue with the social network or other Web sites that might be interested in the application, Spielman said. Market Lodge is just one of more than 16,000 applications that have been designed for Facebook since the social network opened itself up to outside programs. Most of the applications, commonly called "widgets," provide Facebook users with new ways to play games or share photos or musical interests. Although they are attracting big crowds, online social networks so far have had trouble reaping huge profits from advertising. Even Google Inc. (GOOG), which runs the Internet's most lucrative advertising network, has acknowledged having trouble finding the right marketing mix in its business partnership with News Corp.'s (NWS, NWSA) MySpace.com, the only social network larger than Facebook. News Corp. owns Dow Jones, publisher of Dow Jones Newswires. The owner of White Swan, a Boulder, Colo.-based seller of recorded music, thinks paying Facebook members to drum up sales could be more effective than advertising, which can cost up to $15 for every $100 in sales. "Right now when you do marketing, you are competing with so many voices that it's easy to get lost," said Parmita Pushman, White Swan's owner. If Market Lodge bears fruit, Pushman said she will face a new problem: figuring out how to persuade more Facebook members to recommend her products in their personal stores.
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