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Facebook builds on mobile loyalty hype via Tagtile acquisition

April 18, 2012

The Tagtile iPhone app

Facebook is continuing its push into mobile with its latest deal to acquire the loyalty app Tagtile pointing to how the social media giant might use mobile to connect the dots between social media display ads and in-store activity.

Mobile commerce is an ongoing focus for Facebook, which recently reintrodued daily deals – following an aborted attempt last year – in the form of Facebook Offers, a new ad format for merchants that will enable Facebook fans to access special offers and redeem them by showing their phones. The Tagtile app, which enables users to earn tags or rewards by tapping their phone against the Tagtile Cube at the point-of-sale in stores, is another example of how Facebook is building its mobile commerce strategy.  

“The value here is not the loyalty component in my opinion, or even the app, but, rather, the infrastructure around the plug-in point of sale device so verified ‘mobile proof of presence’ can be tracked,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston

“Facebook is wisely trying to bridge the gap between Facebook-displayed ads and an actual store visit,” he said.

“Mobile is not a passing fad or add-on to a traditional PC model for doing business – mobile has the potential to redefine how companies operate and should lie at the very core of any digital strategy. We saw this exemplified by the recent Instagram purchase.”

Conversion metrics
While Tagtile as its exists today will not be a part of what the app’s tem does at Facebook, according to an announcement of the news on Tagtile’s Web site, the service brings with it key technology that Facebook may find useful.

The service is centered about the Tagtile Cube that sits at the point-of-sale. Once users download the app, they can tap their phone against the cube to receive coupons, special offers and rewards.

The acquisition of Tagtile is less about a loyalty strategy and more about Facebook trying to obtain accurate conversion metrics that can help it selling more advertising to marketers.

Tagtile is designed to help local business owners build relationships with their best customers.

For merchants, Tagtile connects purchase history with customer identity to provide important information about a merchant’s customer base. The app enables merchants to track the customer base, including the frequency of their visits so they can send push notifications and targeted information directly to customers’ phones.

The app is also integrated with Facebook and Twitter to enable users to share their experiences.

The app is currently available for iPhone and Android smartphones.

While the service will continue to work as is for now, Tagtile said on its Web site that, following the deal with Facebook, it will not be taking on any new customers.

Monetizing mobile
Social networks such as Facebook and others face challenges monetizing their mobile strategies in part because the metrics to show how a mobile offer translates to an in-store activity have been lacking. However, as Facebook’s mobile user base continues to grow – at the expense of desktop use in some cases – the social media network has said itself that it is imperative to find a way to drive mobile advertising sales.

The company has taken several steps over the past few months with mobile ad sales in mind, including recently making Sponsored Stories available in mobile for the first time. The acquisition of Tagtile is another step in its strategy to monetize mobile.

While details about how much Facebook paid for Tagtile are not available, the social media network recently spent $1 billion to acquire the mobile app Instagram, which could enable it to embed brand ads into the Instagram photo stream using Facebook’s targeting capabilities.

“Traditional location-enablement like GPS has fallen short and fuzzy metrics have been the norm as a result, since a consumer can simply be near a location to receive a push offer or redeem reward,” Mr. Kerr said.

“A system like this allows Facebook to know who was where and when and what they did there,” he said.

“This is tracked mobile marketing ROI on a very granular level and gives Facebook a proprietary way to compile real metrics based on real consumer actions, at the point of sale.”

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