Finally, Facebook is the Phone Book

“Facebook is the phone book.” It has become a common trope in tech that Facebook, having amassed the digital identities of over 1.6 Billion MAUs, has become the phone book. And to an extent, this is true from the perspectives of its users. However, if we step back and really assess the phone book analogy, it is only accurate if the phone book only encompassed the White Pages. You know, that list of names and addresses that we used to them thumb through to find contact information for people in our city or town. But no phone book complete is without the Yellow Pages.

Where’s the Yellow Pages?

Ever since Facebook launched in 2004, the days of the White Pages were numbered with Facebook having sufficiently usurped its job-to-be-done. But the phone book isn’t just the White Pages; it includes the Yellow Pages too. And while Facebook has built out robust Pages and Messenger functionality for businesses to set up shop on the Big Blue App’s properties, its “Yellow Pages” functionality has been more useful for small to medium-sized businesses than the retail giants that it depends on for advertising revenue.

A case could even be made that Google and its search products functioned better as the Yellow Pages than the Facebook Pages product ever did (more on that later). Now, Facebook is finally adding functionality that might bring the phone book analogy full-circle. Facebook has launched its new dynamic ads product, tracking real-time inventory for local retailers and offering of buying and contact options in-app. For the first time, Facebook is truly becoming the phone book and this has the potential will greatly increase ad revenues while attacking one of Google’s main revenue drivers.

Closing the Loop between Mobile Ads and In-Store Purchases

Facebook’s role as the new Yellow Pages presents the opportunity and challenge of being the platform of record for local retailers and merchants.67% of U.S. consumers visit stores as a part of their mobile shopping experience. 55% of U.S. customers still prefer to make purchases in-store.

Being able to leverage mobile ads to drive consumers in-store is a paramount concern for retailers as retail foot traffic continues to plummet. Facebook knows this and is launching these dynamic ads for retailers in hopes of A) increasing ad revenues by showing the measurable value of Facebook dynamic ads on mobile and B) increasing ecommerce transaction directly on Facebook via the dynamic ads.

These new dynamic ads are purported to close the loop between a retailer’s mobile ads and in-store purchases at one of the retailer’s nearby location. Similar to old Yellow Pages listings, local retailers and merchants pay to have dynamic ads served to users on the Facebook platform.

This is done when the retailers connect their inventory and POS systems to Facebook’s Offline Conversions API. When a Facebook user sees a local retailer’s add on Facebook, they will only see products that are in stock at the retailer’s nearest location. If that user then proceeds to purchase a product at the retailer’s location using a credit card, debit card or loyalty card, the retailer’s POS system will ping Offline Conversions API to verify that customer was a Facebook user and was served an dynamic ad prior to the purchase.

Mobile ad attribution to sales has always been a tricky issue for Facebook. The rub for marketers using mobile ads has been measuring attribution to actual sales, specifically in-store. Facebook is promising retailers that these dynamic ads will kill two birds with one stone?—?1. retailers will be able to know if a mobile ad led to an in-store purchase and 2. whether their mobile ads are relevant to the Facebook audience and thus an appropriate channel for ad spend.

Push to Drive Direct Commerce on Facebook

In addition to the new dynamic ads, Facebook has also brought more utility to Facebook pages. The new features allow business to offer ticketing and book appointments without users ever leaving Facebook to complete the order. This is a significant improvement upon previous business pages in that users can actually buy products and services on Facebook, not just find store locations.

The importance of these new features cannot be overstated. If you're a business already spending ad dollars on Facebook to effectively target and reach new users and you can now transact directly with them on Facebook at their convenience, what place does Google and its Adwords and Adsense have in your business strategy? I'm sure that's a question that makes quite a few Google executives uneasy.

Where Does Google Stand in All of This?

With Facebook finally becoming the phone book in truest sense of the word, Google is in a interesting position. The company is still the dominant player in search advertising and has launched its own ad products that cater to local retailers and merchants. The problem is Google offers an intentional search experience that users must seek out, whereas Facebook has cornered the market on attention and passive engagement.

Google’s ad experience has inherently more friction because it requires more action by the user to get the desired result. Facebook has the luxury of serving up ads to its passive user base based on ad targeting and a persistent identity that every user tacitly hands over. If you’re a user, while would you leave Facebook to google a retailer’s locations or inventory when you can do that task within the app you spend an average of 55 minutes of your day.

Google knows this, which is why it has launched the Pixel phone with its Google Assistant exclusively. Now that Google owns an entire device from the hardware to the operating system (OS), the company can leverage Google Assistant across all of the apps on the phone. Facebook included. This could potentially allow Pixel users to skip Facebook's ad experience entirely, by simply asking questions of Google Assistant directly.

Facebook’s combination of persistent identity (White Pages) and retailer/merchant ad platform (Yellow Pages) on its mobile first gives it the best chance to dominate mobile advertising in a way that Google isn’t capable of. That’s the power of owning a social platform with identity at its core. It’s ironic that Facebook’s path to becoming the de facto phone book in the internet age was cemented when it defeated Google Plus.

The phone book is a deeply social tool and social has been a defining weakness for Google. Dynamic ads for retailers and new features for business pages have the potential to deliver significant blow to Google’s prospects in mobile ads, while boosting Facebook’s bottom line. Factoring in the Pixel phone, Google stands a better-than-good chance here in this race, but Facebook undoubtedly has pole position.