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Square Teams Up With Facebook to Offer Ads That Can Be Gauged

Square Teams Up With Facebook to Offer Ads That Can Be Gauged

SAN FRANCISCO — Square has long pitched itself to small businesses as a one-stop shop for processing customers’ credit cards. Now the company wants to help get more of those customers in the door.

On Wednesday, Square announced a new integration with Facebook. Under the integration, small businesses that use Square to process payments can buy and target Facebook advertising using Square’s software. Square will make subscription fees off the new product.

Small businesses can benefit from the move because Facebook ads bought through Square’s platform are directly connected to sales activity and data, Square said. That will allow business owners to understand whether their Facebook ads are working to attract new and repeat customers.

“There’s a lot of excitement around buying Facebook ads, but the critical missing link is, if I put down $5, how do I know if it worked?” said Saumil Mehta, Square’s customer engagement lead. “The ability to track and close the loop from advertisement to sale — that’s the holy grail.”

The Facebook ad integration is just the most recent new line of business for Square, which went public in November. When the company began in 2009, it focused on providing a square credit card reader that easily attached to smartphones and tablets, giving small, cash-only businesses the ability to accept credit cards. Square takes a small percentage of each transaction, a fee it splits with credit card companies and other financial intermediaries.

But as Square has grown, the company has diversified from that payments processing core, which some analysts and investors have criticized for having overly thin margins.

Square now offers cash advances to merchants through Square Capital, scheduling with Square Appointments and food delivery with Caviar. The company has also begun offering other subscription-based products to businesses, like an email marketing service linked to sales history.

The new Facebook advertising integration was spurred by an acquisition of talent and technology from a start-up called LocBox a few months ago. Square hired Mr. Mehta and his colleagues from LocBox, which specialized in online marketing for small and local businesses, to work on similar advertising technology at Square.

The new lines of business still account for far less revenue than Square earns by processing payments. But Square believes that as more small businesses begin adopting its full array of products, these nascent revenue streams will grow.

Two weeks ago, Square reported its first quarterly earnings as a public company, posting a 49 percent revenue increase to $374 million for the fourth quarter from a year ago, with sales from its software and data products more than tripling.