Fashion World Mulls Facebook IPO’s Impact

As the social-networking site’s initial public offering takes off today, all eyes are on the future, and Facebook's long-term potential.

with contributions from Vicki M. Young, Erik Maza
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Burberry’s Facebook page.

Photo By Courtesy Photo

Sephora has been advertising on Facebook for nearly four years — and although senior vice president of Sephora Direct Julie Bornstein declines to reveal the percentage of the company’s advertising budget dedicated to the platform, she said that investment in Facebook ads has grown each year. With Sephora having over 3 million “likes,” Bornstein contended that much testing, research and targeting has helped the company figure out the formula that works, adding that the main goal is to bolster its Facebook community, followed by a secondary goal of driving sales.

Coach, at almost 3.4 million “likes,” has advertised on Facebook for the past year, and David Duplantis, executive vice president, global Web and digital media, said the goal is to drive fan acquisition and engagement.

“Facebook has changed the world and brands and people have truly benefited. It’s going to be fascinating to see how Facebook evolves post-IPO. I believe advertising will become a bigger priority, and that, coupled with continued innovation, means the opportunities are limitless for both Facebook and the fashion industry,” he said.

Nordstrom, which has about 1.4 million “likes,” began advertising on the medium in 2010 in support of its annual anniversary sale — and, according to the retailer, it will continue to do so. In addition to advertising, the company will explore other approaches to social commerce, with an emphasis on finding seamless and convenient ways for its customers to purchase online.

Many firms have developed fashion apps for the Facebook platform. One of them is TheFind, which aggregates Facebook “likes” from retailers across the Web. TheFind, through its social shopping app called Glimpse, then uses that data to create a curated shopping experience that lets users see other items they might be interested in buying based on their “likes.” Like Pinterest, Glimpse can be available for everyone’s friends to see or can be hidden from view.

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Glimpse is hoping it can facilitate F-commerce on the platform, even after brands like Gap and J.C. Penney have shuttered Facebook stores.

Fiona Dias, chief strategy officer of, believes that the jury is still out on Facebook’s impact on retail and fashion.

“Facebook is very good at building relationships among people.…People go to Facebook to hang out with their friends. [However], anyone who has advertised on Facebook has been disappointed, as [many] ads are rarely clicked on,” Dias said.

She said that many companies don’t have a clue as to what Facebook’s impact is on their business, because measuring it is very hard. She explained: “It doesn’t show up on a sale. ‘Likes’ [may] go up, but what’s the value of a ‘like’?”

Dias points to sister company Rue La La — both are under the Kynetic umbrella — and Gilt Groupe, where Facebook can be helpful for flash sales due to the flash-sale business model’s limitations on either inventory or time duration for the sale as exceptions.

Beyond fashion brands, many wonder if Facebook’s new public status will pressure the medium to become an even greater competitor for ad dollars with magazines and newspapers, especially in light of General Motors’ decision to pull $10 million in advertising earlier this week. Traditional publishers such as The New York Times, Dow Jones and Hearst Magazines view Facebook as an opportunity — but not without some trepidation.

“Facebook is certainly a competitor to Dow Jones, as is television and every other media competitor,” said Mark Fishkin, vice president of digital sales at The Wall Street Journal Digital Network. “It’s no surprise that ad dollars have flowed to Facebook over the last few years as clients have felt they ‘had to’ be there.”

“For the industry in general, there is always concern when a player of the size and scale of Facebook enters the marketplace,” said Eileen Murphy, a spokeswoman for the Times.

Complicating the direct competition is that the social network is also a huge distribution channel for publishers, one whose 700 million users they can’t help but capitalize on as they look to connect with new readers. Even GM said it will maintain a large presence on Facebook.

Robin Steinberg, a media buyer at MediaVest, said the benefits of Facebook for publishers are greater than the risks. This is especially true as most publishers begin to move toward balancing consumer and advertising revenue.

“As publishers transform their business, this is one component of how they’re creating content and connecting to consumers,” she said. “It allows them to start a conversation in the social ecosystem.”

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