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Seeding Social Commerce

Posted by Daniel Flamberg on November 10, 2009 at 04:00 PM PDT

The exponential growth of social media sets huge expectations for social commerce. Marketers, reluctant to crash the karma of evolving social networks, have long thought that the channels facilitating conversations, interactions and personal CRM could easily facilitate and probably accelerate eCommerce.

Most brands have taken a wait-and-see approach. The conventional wisdom, till now, has been that social media is for branding and a tool to to monitor the conversation rather than an active sales channel. Most marketers have silently done the math on social networks hoping that connected networks of friends could be cost-efficient viral media channels for merchandizing products and services.

With an average of two social media accounts per person, an individual with with 50 or more friends, depending on their willingness to tout a favorite brand, product or service, could potentially message as many as 100,000 other people. This potential media multiplier makes marketers salivate.

But most have restrained themselves fearful of alienating potential customers or of provoking a negative backlash. Notable exceptions are the Dell Outlet who reports sales of $3 million in computers and Whole Foods who hawk weekly specials on Twitter and 1-800-Flowers who set up a store or Chick-A-Fil who gave away 25,000 coupons for a free chicken sandwich over five days on Facebook.

New survey research by Performics and ROI Research and by Razorfish suggest that social media users not only interact with brands and talk up brands, but they are actively looking for deals, promotions and coupons on YouTube, Facebook, Twitter and others.

The Performics and ROI team surveyed 3011 social network users and found that 4 in 10 talked about brands on social networks and that 1 in 4 have gone directly to an eCommerce site after learning about a new product or brand in social media. With slight variations, the data holds true across the platforms, though Facebook seems to have twice as many users as MySpace, YouTube or Twitter and six times more than LinkedIn, MeetUp or Flickr and others, which have more of a specialized use pattern or niche focus.

The leading messages that resonate with consumers seem to be coupon downloads, alerts on special deals, offers to participate in sweepstakes or win redeemable points or online currency. Scott Haiges of ROI Research drew the summary conclusion. "Consumers are open to receiving promotions and offers from brands that they're connected with through social networks."

This understanding was validated or confirmed by Razorfish's 2009 FEED Report, a survey of 1000 consumers; each of whom has a social media account, has spent $150 online in the last six months, has visited a community site and consumed or created some form of digital media.

Between 3 and 4 of every ten respondents said special or exclusive deals is the main reason they follow brands in social media networks. Sixty-four percent said they made their first purchase from a company as a result of a digital interaction and virtually everybody (97%) said a digital interaction influenced brand affinity. Forty percent had "friended" a brand and 70 percent participated in brand sponsored contests or sweepstakes.

Garrick Schmitt, the editor of the study, figured out "people want deals." So the key to engagement on social properties comes down to old-fashioned direct marketing techniques. And these new platforms appear to work like their older counterparts with a couple of exceptions.

These exceptions are, according to David Armano of the Dachis Group writing in the Harvard Business Daily Alert, faster uptake and greater mobility which creates the possibility of dayparting. He argues that adoption will increase and deepen but be mitigated by a growing trend among enterprises and organizations to ban social network use at work. This could create distinct daytime and nighttime usage patterns, not unlike broadcast TV, that attracts different audiences of prospects and customers and prompts different creative and messaging strategies during different time periods

Similarly the increasing penetration of smart phones and the lower cost of bandwidth will spark greater mobile access to and use of social networks and video content. This will also have implications for message development and propagation as well as audience segmentation. And as these phenomenon spread around the world and get translated into multiple languages, more and more people will buy stuff realizing the dream of social commerce.

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