Why Facebook’s 'Buy' Button Will Fail

Facebook Privacy: 10 Settings To Check

Last week, Facebook announced that it's testing a new advertising unit in its Marketplace that will feature a Buy button in the ad. The button lets users purchase a product directly from a business without leaving the social network.

It's no secret that Facebook is a digital advertising behemoth. eMarketer predicts that Facebook will serve more than 21% of all mobile ads this year -- that's 1 in 5 ads served on a mobile device -- earning it the No. 2 spot in all digital ad sales, second only to Google.

That being said, Facebook's "buy now" ads simply won't work. Here's why.

Consumers have very little trust in the social network's privacy standards. Most recently, a report revealed that Facebook experimented on users' moods by manipulating their news feeds. Savvy Facebook users will almost certainly suspect that Buy-button transactions will be used to target them with even more ads. The social network hasn't commented on this yet, but it's by no means an unfounded theory. But even if Facebook is able to overcome its trust problem, it still faces an even more serious threat: timing.

[Facebook and Twitter test the waters. Read Facebook, Twitter Push E-Commerce, Like It Or Not.]

For most e-commerce sites, a great ad is made up of three key components:

1.    The product(s) sold in the ad appeals to its target audience.

2.    The audience has the means to buy the item.

3.    The ad is shown at a time when the audience is ready to buy.

Advertising on Facebook Marketplace falls short here because businesses cannot target users based on a signal of their intent to buy. In recent years, advertising has improved with Facebook Ad Exchange (FBX), where businesses can target users who already visited their site but did not complete a purchase. Unfortunately, there is no indication that the "buy now" button will be offered through FBX.

On the other hand, Google's ads are inherently more valuable to e-commerce sites because searching for a product indicates that a consumer is ready or almost ready to purchase an item. Google ads fulfill all three of the criteria above -- and they don't require a third-party ad unit to support the transaction.

Unless Facebook plans to integrate the new button into its Ad Exchange, the Buy-button feature will not reach potential customers when they are ready to shop. This means that the Buy button will only ever be useful for impulse products, which only make up a small fraction of the e-commerce industry. Without retargeting capabilities, the efficacy of the Buy button will always lag behind e-commerce ads on Google and FBX. 

For what it's worth, Twitter's plan to incorporate e-commerce advertising also fails to target consumers when they are ready to buy. However, Twitter ads are new and exciting -- they don't suffer the same negative perception as ads on Facebook. Consumers may be more willing to give them a shot, and retailers may be more willing to wait for a reasonable ROI.

Businesses, what do you think of Facebook's new Buy button? Weigh in below.

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