Is Anyone Clicking the 'Gift a Gift' Button on Facebook?

VP-Online at 1-800-Flowers Says Adoption of 'Gifts' Slower Than Expected

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Since launching last fall, Facebook "Gifts" has been thrust into users' consciousness by suggestions from the social network that they buy a gift for a friend who just started a new job or announced a pregnancy. But is anyone buying?

Born out of the company's acquisition of the social-gifting startup Karma a year ago, Gifts lets users buy each other physical and digital goods, including Starbucks gift cards, Uber rides, bottles of wine and a subscription to the "jerky of the month" club, but it wasn't mentioned during last week's earnings call, suggesting it isn't contributing much to the company's top line.

Facebook has previously sought to temper expectations about short-term revenue potential for gifts. During its earnings call in January for the last quarter of 2012 -- when it had been heavily promoting gifts on Facebook.com in the weeks leading up to the holidays -- the company's chief financial officer David Ebersman said that gifts' contribution to revenue had been "very small" and would likely remain so in 2013.

One of Facebook's launch partners for Gifts, 1-800-Flowers, acknowledged that transactional activity on the platform has not met its expectations. During a conference call with Macquarie Securities' Ben Schachter earlier this week, the direct-response advertiser's VP of online, mobile and social, Amit Shah, said that the upside of Gifts is being able to offer up its full portfolio of brands to consumers in one place. (The $5 buttercream birthday cookie from Cheryl's, owned by 1-800-Flowers, is a top seller on Gifts.)

The downside is the lack of customer information and not being at the center of the brand experience, he said. Facebook doesn't share the credit-card data it collects to fulfill orders with its partners, and in some cases -- like when someone's trying to buy flowers -- it's hard to make out who the seller of the product is. (The likes of Starbucks and Target have their logos boldly displayed for those who buy gift cards, however.)

"In a sense you're helping Facebook acquire credit cards at a very cheap cost," Mr. Shah said. "At some point they'll have to start to supply [more] information or we'll have to pull back on our rev-share rates."

Though Facebook Gifts hasn't gotten the traction he thought it would, Mr. Shah still thinks it has a future, especially as it rolls out globally onto mobile devices in markets with nascent e-commerce ecosystems.

"This will become one of the key platforms that small and medium-size retailers can easily tap into," he said.

Meanwhile, Facebook is still trying to spur user adoption of Gifts by constantly reminding its users of their existence -- even when it's awkward. A "Give a Gift" button began cropping up this winter beside posts in users' news feed that Facebook algorithmically inferred were conveying good news, like the birth of a baby or a new job.

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