It’s still unproven as a sales channel, but social media will be central to the future of any retailer’s strategy.
When Facebook founder Mark Zuckerberg rang the opening bell at NASDAQ to announce the social media network’s IPO with a headline-grabbing price of $36 (£23) per share, few could have predicted the share price would tumble so quickly, falling 12% in the space of a week, and leading many to question the real value of social media platforms.
However, there is no doubt social media has deeply penetrated the lives of consumers, but the true value to these platforms is hard to quantify, as final sales take place either in stores or on retailers’ websites. Paul Bidder, managing director of social commerce platform Colony Commerce, says social media platforms are highly influential in consumer buying decisions due to peer-to-peer recommendations: “A comprehensive social strategy encompassing all platforms in a user-driven way makes a measurable difference when it comes to the bottom line.”
Research by PR agency Fishburn Hedges and Echo Research found that 18 million consumers are flooding social media platforms to speak to brands, and that in only eight months the number of people that have dealt with a brand via this channel has doubled, from 19% in August 2011 to 36% in April 2012.
However, Simon Boydell, marketing manager at consultancy Market Force Europe, warns that the rise in social media has left brands more accountable than ever before. “With reputations being won and lost in as little as 140 characters, what your customers think, do and say about your brand is more important than ever,” he says.
The real challenge is identifying which platforms to invest time and resources in, and how to best use them.
Despite recent troubles Facebook remains the number one social media site, with 901 million users at the end of March 2012, 90 million of these are in the UK; 80% of active monthly users are from outside the US and Canada.
“We’re starting to see more access behind the scenes to things like catwalk shows or collection previews on Facebook. It’s this sort of unique access that people really like to engage with so the more compelling the content that brands are providing the more their message spreads between friends,” says Gavin Sathianathan, head of commerce partnerships at Facebook.
The introduction of the Facebook timeline in March means pages are now much more visually led and engaging for the consumer – with Marks & Spencer among the early adopters. However, f-commerce has so far failed to make an impact, with retailers such as JC Penney and GAP having closed their Facebook stores.
However, Martin Newman, chief executive of ecommerce specialist Practicology, says monetisation is a challenge facing all social media platforms. “While advertising and f-commerce have yet to deliver a great return on investment, it has such a large cash pile now that, a bit like Google, it can grow through acquisition and develop additional innovative services that drive a significant uplift in its revenue,” he says.
Fast rivalling Facebook in terms of consumer penetration is Twitter. The site has 140 million active users worldwide, and indicative of its rapidly-growing popularity is the fact the site took three years to get to its first billion tweets, but now achieves this every three days.
Rachel Bremer, European communications manager at Twitter, says fashion brands should use Twitter as a two-way conversation platform and reward customers with behind-the-scenes content, as Burberry did with its Tweet-walk for London Fashion Week in September, when it took pictures of all the models before they stepped onto the catwalk. “That’s an example of how Twitter can bring people closer to what they care about,” she says.
The British Fashion Council (BFC) has also seized on the opportunity provided by social media by partnering with Twitter for the past two seasons at London Fashion Week as well as hatching plans to launch on content-sharing site Pinterest. “It’s invaluable. We now find that the strongest response for pre-event registration comes from tweets which invite \our followers to register, rather than dedicated e-newsletters,” says Rosanna Falconer, digital marketing executive at the BFC.
Despite the dominance of Facebook and Twitter, a number of other social media platforms are coming to the fore.
Launched in October 2010, photo-sharing app Instagram has 30 million registered users, 5 million photos uploaded per day,
575 likes per second and 81 comments per second. Department store Selfridges uses both Instagram and Pinterest to engage its customers with exclusive content. “The nice thing about Pinterest and Instagram combined is that you’re able to deliver a really lovely experience, without huge overheads in terms of professional photography. You get that really nice, raw feeling about things,” says Zia Zareem-Slade, head of online at Selfridges.
Pinterest has undoubtedly been the big social media story of this year. Launched in early 2010, a recent report from data analytics company Comscore showed that Pinterest’s UK audience is growing at a phenomenal rate, with 250,000 unique users in January 2012, up 76% from May 2011.
“Our customers are using it a lot and it’s driving decent volumes of traffic back to our website,” says Jonathan Hudson, social and mobile lead at Shop Direct Group. “We’re going to be adding Pinterest share buttons to our product pages over the next couple of weeks and it will be interesting to see how that one grows.”
Meanwhile, launched just this year Google+ has some way to go to catch up with rivals such as Facebook, but with a reported 170 million users already signed up, it could be one to watch.
“We’re starting to look more closely at Google+,” says Hudson. “It’s got the potential to be enormous and we know there are lots of people registered on it. We’re not seeing masses of consumer interaction on it right now, but that could change.”
Looking ahead, Hudson says there is a trend towards social gifting. “It’s an emerging way of sharing product and content, and definitely one to watch,” he says.
One example of this is mobile phone application Wrapp, whereby consumers can choose to link to their Facebook accounts to remind them of friends’ birthdays and then post gifts to their walls. Launched in Sweden last November, Wrapp has 214,000 active users and counts womenswear chain Karen Millen among its customers.
While questions remain over its validity as a direct sales channel, social media is an essential brand building tool in today’s market. Bidder says each platform performs a different function, and retailers should use them cohesively together to create an effective long-term digital strategy: “It’s like creating an outfit – all accessories need to fit together to create the perfect look.”
Which is the social media platform to watch in the next 18 months?
Four multichannel experts pick out the sites they expect to grow
Jonathan Hudson, social and mobile lead, Shop Direct Group Google+.
The power that sits behind it means it could do wonders for SEO and it also has some great functionality, such as allowing you to create circles out of your VIP customers, for example.
Paul Bidder, managing director, Colony Commerce
Pinterest is seen as becoming critical to ecommerce strategies; 2012 could be the year that [music identification mobile app] Shazam brings the online experience to offline locations, as Calvin Klein has done in its stores.
Zia Zareem-Slade, head of online, Selfridges
Twitter will have the greatest longevity. It has completely changed the way people consume news. Interesting developments around mobile with augmented reality, and apps like Blippar, are also offering a compelling experience.
Martin Newman, chief executive, Practicology
I think that Pinterest is the social media platform to watch. However, it could go either way. Pinterest could very well be the next Facebook, or it could just as easily crash and burn.