Facebook Gifts Partners With Apple iTunes

Talk about a smooth way to get into our pockets. In a strategic effort to increase its mobile user revenue and break further into the $200 billion e-commerce market, Facebook launched a service called Facebook Gifts in September, which allows users to purchase and send actual gifts to friends. Since Facebook already has users’ birthdates and anniversaries in its database, it can easily send important date reminders out with a link to its gift store. Ingenious marketing tactic, right?

Now Facebook has really upped the ante by partnering with Apple to sell iTunes digital gift certificates through Facebook Gifts. No shipping costs, no guesswork to have an item arrive on the right day. Users can even suggest music, video or apps for their friends on which to spend the $10, $15, $25 or $50 credit. Once the gift is purchased, it will appear in the recipient’s Facebook timeline until he or she opens it.

Other vendors included in the Facebook Gifts portfolio include Dean & DeLuca, BabyGap, HuLu Plus and Starbucks. The service will allow Facebook to accumulate even more user information to refine its targeted advertisements, which account for the majority of the company’s revenue. Facebook says it does not currently use data collected through the gift service for advertising purposes, but it will not rule out the possibility in the future.

The hard part for Facebook was aggregating a billion users,” Robert W. Baird analyst Colin Sebastian told the Wall Street Journal. “Now it’s more about how to monetize those users without scaring them away. Gifts should also contribute more to Facebook’s treasure trove of user data, which has the benefit of a virtuous cycle, driving more personalization of the site, leading to better and more targeted ads, which improves overall monetization.”

Will users hand over their credit card details to Facebook? The site already collects account information from its social gamers, and other businesses—such as Apple, Amazon and EBay—have proven that people are willing to store their financial information with an online vendor they frequently use. Apple has more than 400 million credit cards on file, while EBay’s PayPal service has stored information for more than 117 million users.

And Facebook Gifts adds an extra element of ease into the gift-giving market. Facebook users will be prompted to purchase friends’ gifts on their birthdays through a gift-box icon—no more remembering dates or frequently checking calendars. By clicking on the icon, users will be offered a large variety of merchandise—everything from magazine subscriptions to beer glasses, as well as charitable donations. Since the service has launched, the average purchase has cost $25, according to Facebook.

It’s better than advertisements,” Hjalmar Winblad, who created a mobile gift-certificate application, told the Wall Street Journal. “It’s not intrusive. It’s actually a gift card from a friend, based on his or her notion about you, and your friend probably knows better what you like than an algorithm.”