Today in Social

The Wall Street Journal picked up on a new report from Forrester that’s bearish on Facebook being a big player in e-commerce, noting that retailers say email and search are more effective at customer conversion. Matthew Ingram gives some more detail, and suggests Facebook’s lofty valuation is at risk. Perhaps, but most of the revenue forecasts I’ve seen for Facebook are way more dependent on advertising than commerce. Forrester analyst Sucharita Mulpuru points out Facebook data is underutilized, something my earlier report said was a potential inhibitor to social commerce overall. In that report I’m skeptical about Facebook storefronts, too. But social commerce isn’t necessarily about driving transactions on social networks. Groupon’s early success is from tapping local ad budgets almost like Yellow Pages. (Mulpuru doesn’t like Groupon, either.) Facebook execs told me they were focused on advertising rather than shopping, and on making the platform work for things like recommendations and promotions. Sounds like a plan.

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David Card

VP Research Gigaom Research

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