As business is becoming more and more integrated into social media, translating “likes” and “follows” and “pins” into dollar signs becomes a much stronger priority. While we can go back and forth on social media ROI all day, the area we want to focus on is social media and its influence on commerce.
In a nutshell, commerce is big and ecommerce is continuing to grow by leaps and bounds. Social media is also big. As the two areas have come together, the results are, as you may already know, huge.
The big picture: the fastest growing marketplace on the planet is unfolding in the palms of our hands on smartphones exploding with the financial power of social media.
One very obvious way that social media has impacted commerce is through real-time feedback. Social media channels, of course, allow businesses and consumers to have instantaneous interaction. The added value on the business side is that the feedback is shared on the customer’s network. When it is positive, it serves as the best form of advertising.
For customers, the interaction provides a much better means for voicing a concern or problem as opposed to calling customer service. On the business side again, this serves as a valuable opportunity to solve a problem and potentially build a brand advocate if handled effectively.
What’s interesting now is that we are starting to see specific commerce trends around social channels such as Twitter and Pinterest. According to a recent report from BI Intelligence called “The New Art of Social Commerce: How Brands and Retailers Are Converting Tweets, Pins, and Likes into Sales,” Pinterest brought in 23 percent of social-generated e-commerce sales, and Twitter brought in 22 percent. Facebook also generated a bit more coming in at 28 percent of social-generated e-commerce sales.
Even more interesting is the fact that these trends were NOT happening a year ago. Pinterest barely registered any sales, bringing in just 2 percent of sales. Facebook, however, was the dominant in this area generating 55 percent of social-related e-commerce sales.
In a direct selling environment, these numbers don’t hold much weight. But, remember that social media is about indirect selling. Social media is about building relationships, providing a human voice to a brand, and creating brand awareness, among many other indirect approaches. So, for a supplemental channel, if you will, these numbers are actually quite noteworthy. Furthermore, as indicated by the current trends, these statistics will grow as social media grows and expands.
Another factor to think about in this regard is the fact that these social sites are still young. Just as many are still trying to figure out the evolving world of utilizing social media for business, the social networks themselves are still innovating and adapting to a changing business climate.
Facebook, for example, will likely do away with its gifts service as a source of monetization since its performance is lacking. But, Facebook Exchange (FBX), the company’s retargeting platform, appears to be providing value for online retailers. In fact, Google and Facebook actually announced recently that they are partnering in a joint advertising initiative.
According to the deal, Google’s online advertising arm DoubleClick will extend its services to include FBX. In other words, DoubleClick clients will be able to purchase ad inventory on FBX.
It’s rather ironic when competitors come together in deals such as this, but when it benefits both parties, I guess they put aside other differences. Facebook will benefit due to Google’s long-standing dominance of the online advertising market, and Google will benefit from Facebook’s proven retargeting platform. As a result, this partnership has the potential to project much more growth in Facebook and e-commerce.
Twitter is also showing that it is committed to growing retail activity on its platform since it hired its first commerce chief earlier this year.
Pinterest too cannot be forgotten in this regard. The company has made many moves including “promoted pins” recently, which show that it is a serious contender in the social commerce space.
Time will ultimately tell just how these initiatives will take off, but our bet is on growth within social commerce.
Images courtesy of AspirantSG.com and intelligence.businessinsider.com respectively.