March 13, 2008

New Facebook Feature Pays Sales Commissions

Popular social networking site Facebook introduced a application called Market Lodge last week that allows members to set up personalized stores and earn commissions based on sales.

The Market Lodge program, made by Conifer, Colo.-based startup bSocial Networks Inc., is based on the premise that customers are more likely to buy products and services recommended by someone they know.

The application will reward Facebook's roughly 67 million members with a 10 percent commission on all sales generated through their recommendations.  

Facebook has made previous attempts to inject commerce attributes to its site. Last year the company introduced a system that broadcasted product endorsements among people who know each other, but the strategy received a user backlash as customers rebelled against the "Beacon" feature that tracked and shared information on purchases made through other Web sites.  In the end, Facebook had to provide its users the option to disable Beacon.

But bSocial Networks believes Facebook users will be more receptive to an approach that offers a financial incentive for participating.

To participate in Market Lodge, users customize their own personal stores, choosing from more than 1,200 products sold by about 50 different merchants.

Once a personal store is set up, a user can extend invitations to others in their network to view the store's contents and recommendations. Market Lodge users can even earn commissions from their own purchases through their personal stores.

Inventory, order processing and delivery are handled directly through the merchants, as with any other sale.

"We think this could be very lucrative for Facebook's members," bSocial co-founder Sue Spielman told the Associated Press.

So far over 100 people have signed up for Market Lodge since its launch last week.

Although initially Facebook won't receive a share of the Market Lodge sales, bSocial Networks may consider a revenue-sharing relationship with Facebook and other Web sites interested in the application, Spielman said.

Market Lodge is just one of more than 16,000 applications, commonly called "widgets", that have been designed for Facebook since the company made its Web site available to outside programs.  Most of the widgets provide new ways to play games, share photos, music and other interests.

Although wildly popular in terms of membership, to date the online social networking sites have not seen significant financial profits.

Even market-leading Google Inc., which runs the Internet's most popular advertising network, is struggling to finding the best model in its partnership with News Corp.'s MySpace.com, the only social networking site larger than Facebook.

Boulder, Colo.-based White Swan, which sells recorded music, thinks paying Facebook members to generate 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," Parmita Pushman, White Swan's owner, told Associated Press.

If Market Lodge succeeds, Pushman said she will face a new challenge in persuading more Facebook members to recommend her products in their personal stores.


On the Net:

Facebook Market Lodge

bSocial Networks Inc.