Thursday, September 20, 2012

Facebook Inc (NASDAQ:FB) Found Another Way To Boost Revenue, Shares Near Session Highs

Facebook Inc(NASDAQ:FB) reported that it will begin charging businesses to run Offers on its social networking site. This will turn a previously free site into a prospective revenue generator. This comes at a time when Wall Street is demanding new sources of profit and growth from the firm.

Facebook has launched Facebook Offers this year that allows retailers and other local merchants to send deals to their Facebook fans. Users can claim the offers from their News Feeds and redeem the vouchers at shops to avail discounts.

The service started off as a free service but in the upcoming weeks Facebook will need merchants to pay a minimum $5 on related ads to promote Facebook Offer to a targeted set of customers and their friends.

Ever since Facebook went public in the month of May, the firm has been under a lot of pressure from Wall Street to show how it can turn the giant social network into a money-maker. Facebook stocks have lost about 40% of its value since the IPO.

The commercial potential of Facebook, called the f-commerce is yet to materialize, partially because of retailers have been able to enjoy a host of freebies on the social network to lure customers.

Connecting Facebook Offers to a paid ad service shows that the firm is working on changing this.

Director of product management for Facebook’s advertising and Pages businesses, Gokul Rajaram said that the firm thinks this aligns incentives properly and the best outcome on Facebook Offers will come from organic distribution along with paid distribution.

In last few days, Facebook Offers haven’t been relevant to all kinds of users, partly because some users found deals in their feeds from service providers and merchants based at a faraway place. He mentioned that the requirement to pay for related adverts will help merchants to focus on who and where they want the offer to reach.

Facebook is also working on expanding Offers to businesses that operate only online. The service was only accessible to merchants with physical locations.

Shares of FB were recently trading at $23.13, down 0.70% after hitting session low of $22.67. The stock has risen about 22% in the past one week amid various developments.

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