Sociable Labs Launches Custom Ecommerce Facebook Social Plugin Software With $7 Million Second Round

Sociable Labs has just emerged from stealth and launched its hosted software service that provides large ecommerce websites with custom Facebook social plugins that increase conversions and referral traffic. Rather than implement standard Like buttons or develop their own Open Graph integration, Sociable Labs’ turn-key solution lets sites show their users the products that friends have bought or signed up for, who to ask for, recommendations, and relevant suggestions of friends to invite.

To fund product development and marketing of the “ROI-Guided Social Design” hosted software solution Sociable Labs has raised a $7 million Series B round led by Battery Ventures. The company’s product addresses the traffic and conversion needs of ecommerce sites by exploiting the full potential of Facebook’s social and interest graphs. The company reports that initial tests of the $50,000 a year product have generated a 20-times increase in sharing to Facebook.

Customized Social Plugins Beat One-Size-Fits-All

Facebook’s current social plugins are designed to be generally applicable. The Like button fits most websites, but asking users to Like an action they’ve taken such as buying a product or registering for an event is a bit awkward. The Recommendations and Activity Feed plugins show what friends or the general Facebook populace have Liked, but don’t can’t tell users what friends have bought or browsed.

Sociable Labs’ product lets sites create social plugins designed specifically to encourage sharing of the types of actions that occur on their site. For example, custom plugins can be configured to ask users to “Tell friends what you just bought/signed up for” after they make a purchase or registration. The product leverage a site’s clickstream data and Facebook’s interest graph. That way it can show a customer viewing ecommerce search results which product their friends purchased, which brands their friends browsed most, or which friends have Facebook interests related to the results and might have recommendations.

For example, if I’m browsing skis on a sporting goods website powered by Sociable Labs, I might see a plugin that shows that three friends browsed the Rossignol brand. Then while deciding which pair to buy it could show me friends who Like “Skiing” or “Northstar Ski Resort” on Facebook who I could ask for recommendations. Once I purchase, I’d be shown a Facebook sharing button asking “Josh, show off the new skis you bought to friends”.

Other powerful social plugins Sociable Labs offers include targeted referrals that recommends friends with relevant Likes to invite to a site or send an email promotion to, with the referrer getting a discount when friends sign up. Group promotions let users recruit friends to reduce the price of an item, and an activity stream shows all the recent browsing, shares, and purchases of friends.

Beta client used Sociable Labs’ product to increase the rate of Facebook sharing by its users from 0.2% to 8% and increase conversion rates from Facebook traffic by 33%. Other clients also saw sharing increase by more than 20-fold. These shares generate significant referral traffic and sales for site. In fact, a Sociable Labs study showed that traffic coming from authentic social shares by friends converts 300% better than traffic from news feed updates published by Facebook Pages and 67% better than traffic from email marketing.

Sociable Labs See Sharing as the Key to ROI, Not Page Updates

Founded as part of fbFund in June 2009, the San Francisco-based Sociable Labs has since taken a total of $8.8 million in funding and grown to 25 employees. It is targeting the top 500 internet retailers who may see much more traffic to their website than their Facebook Pages, and therefore want to focus on bridging their sites with the social network. Sociable Labs now has 12 clients paying $50,000 a year subscriptions to its product and more for custom design work to skin the plugins.

The social plugin software is hosted by Sociable Labs so it’s easy to embed into websites. It stores all of a site’s clickstream data, even if the site doesn’t already do that itself. The company found that 40% of visitors to ecommerce sites were currently logged in to Facebook, allowing it to tie clickstream and conversion data to identity and show personalized social plugins to a significant portions of a client’s visitors. Also included in the product are a suite of tools for clients to A/B test and optimize the plugins.

The company’s CEO Nisan Gabbay tells me that “to date, brands have focused on monitoring mentions, gaining fans for their Facebook Pages, and pumping messages to fans. However, the right way to get a return on investment from social is getting more consumer to consumer viral marketing.” This is similar to the approach of BadgeVille, which is using gamification and personalized activity streams to increase loyalty and get users spending more time on content sites.

There are opportunities for ecommerce sites to utilize Facebook’s new Open Graph app system revealed at f8 to drive qualified referral traffic. Gabbay believes “Open Graph is very key to enabling social commerce, but its overwhelming for marketers.” Also, while automatic, implicit Open Graph activity sharing to the Ticker can generate traffic, Sociable Labs encourages explicit shares that are more likely to reach the main news feed, and on-site recommendation plugins that are more advanced than Facebook’s official plugins.

Until now, most Facebook marketing platforms center around Page management, with giants like Buddy Media and Vitrue consolidating the industry by acquiring or partnering with ecommerce, Ads API, and games companies. Buddy Media did acquire and integrate social plugin company Spinback, but otherwise there hasn’t been much activity in the third-party site Facebook integration space.

This is going to change. As brands increase their focus on ROI, they will pay for social plugins that drive more traffic and conversions than Facebook’s. Gabbay agrees, saying “It’s a little early, but I’m sure you’ll see a lot of consolidation” as the bigger players move to add social plugins to their service offering. For now, though, Sociable Labs is a step ahead, offering a product that can drastically improve sharing and conversion rates for ecommerce sites.