Sales directly attributed to social media took a deep dive this year compared to 2011 says an IBM Smarter Commerce benchmark report.
“Shoppers referred from Social Networks such as Facebook, Twitter, LinkedIn and YouTube generated .34 percent of all online sales on Black Friday, a decrease of more than 35 percent from 2011,” stated the report. And out of all social networks listed, Twitter fared the worst driving zero, zilch, nada, nothing in terms of sales!
Ouch! That doesn’t bode well for the future of social commerce…or does it?
Why the decrease? I think some explanation is needed in order to put those numbers into perspective.
Retailers changing tactics
In 2011, retailers used social media as a direct sales channel by offering deep discounts. According to a Wall Street Journal article citing an observation from Jay Henderson, strategy director for IBM Smarter Commerce, the drop could be a “sign that large retailers are using social media more to draw people into stores and less to push shoppers into making instant purchases with deep discounts.”
This tactical shift pushes social media’s influence further up the sales funnel, detaching it from actual transactions. If what Henderson said is true, that doesn’t mean social is less important, only that its role has changed somewhat.
Social media becoming more integrated into marketing campaigns
The WSJ article also suggests that social media is becoming more a part of an overall integrated, multi-channel marketing strategy. That’s as it should be. From a consumer perspective, social is a commonly used channel – a big part of the web’s warf and woof. The use of social by marketers reflects this more deeply engrained behavior.
“Last year was one of the first years there was a big investment by retailers in social media. They tried a lot of things and a lot of discounting,” said Henderson. “Some of what we’ve seen this year is retailers pulling back on promotions designed specifically for social media.”
Better tracking of downstream sales is needed
Techcrunch, which also reported on the IBM study, said better downstream tracking is needed to more accurately determine social media’s influence on sales: “Facebook has been making a major push to get credited for downstream purchases. It’s rolled out both a self-serve User ID matching system and cookie-dropping ads.”
Ad tracking is one thing; tracking organic posts are another. However, based on what it heard from Facebook, Techcrunch says that is “huge.” The top 25 most talked about Pages during the past week were all retailers, and Walmart, Toys’R’Us, and Macy’s had the most Likes, comments, and shares. “User mentions of the word ‘shopping’ spiked 586 percent last week, and many of those probably cited where people were shopping,” remarked Techcrunch.
The lack of downstream tracking could also explain what Twitter had such an abismal showing.
Suffice it to say, for social to become more relevant in terms of commerce, better tracking mechanisms are needed.
Social commerce sales increased late Thanksgiving Day
Part of the reason Black Friday numbers were so low could be due to the fact that retailers were cutting deals on Thanksgiving Day. That had an affect Where social commerce is concerned, as well.
“Sales from social network referrals as a percentage of overall online shopping climbed late Thanksgiving night, presumably after families finished dinner and people reached out on Facebook to their absent friends and relatives,” said the WSJ. Sales via social commerce rose from .2 percent during the day to .63 percent by midnight.
Social commerce aside, the big winner in all of this was mobile. Sales jumped to almost 17 percent from less than 10 percent a year ago, and the iPad was responsible for nearly 10 percent of all traffic from mobile, more than any other device.
Conclusions
Do IBM’s numbers truly mean that the social commerce heyday is over? Are we supposed to throw our hands in the air and label this experiment a failure? Personally, I think it’s too soon to make that determination.
Retailer’s use of social is ever changing. The integration of both social and mobile commerce into an overall marketing mix is taking place. And better downstream tracking is (or will) be developed. My feeling is that we should give it another year before we draw too many final conclusions.
Perhaps we need to think of social media or social commerce as less of a “channel” and more of a layer that accompanies customers all the way through the sales funnel and the shopping journey. Thanks to the growing influence of mobile, consumers are taking the web with them everywhere they go, including stores, and they continue to rely on the influence of friends to help them make smart purchase decisions.
Though its positioning may change, social commerce by its very definition – helping people shop where they socialize and socialize where they shop (including brick and mortar stores) – will continue to be an important factor.
The limited focus on Facebook and Twitter etc. totally misses the point. Social retail is about adapting to changed consumer behaviors and growing digital channels for communication and sales, not about collecting fans, likes and followers.
Facebook in particular is pretty much useless for retail. People do not go there to shop. There is a new wave of sites combining editorial/curation and sales that are much better positioned for social retail – Pinterest is an obvious example.
Peter, thank you for your insights. Agreed that the scope of the report is too limited. What’s worse, people are buying into the data to suggest that social commerce is much ado about nothing, when, as you suggest, there are digital channels being created – Pinterest being one – that prove it has value from a retail perspective.
You sad and I quote “we need to think of social media or social commerce as less of a “channel” and more of a layer that accompanies customers all the way through the sales funnel and the shopping journey”. I think IBM hasn’t given Social Commerce its share of credit in this report. Let me share an example. My friend recently posted on FB that he was looking to buy a music system. He could get couple of responses on the brands he should consider, price band, features etc. Some even commented why he needed a music system at all in the first place:) He got honest insights as all people who commented and advised were the people he knew & trusted. Finally he went to a retailer’s website and made the purchase:). Technically it’s an e-commerce sale and the contribution of Social Commerce is zero here. But is it the truth? It’s Social Commerce which made this sale. Such examples are common on FB and all social media.
Sanjay, I’m sure that type of activity takes places all the time. We rely on the influence of friends when making purchase decisions. Tracking that activity is essential to closing the loop on how much impact social has on sales and I’ll leave that up to smarter heads than me as to how that’s done.
I completely agree with Peter and Sanjay’s comments. This report was completely over assuming and missed a lot of key insights – who were these retailers? Are their website social commerce friendly? How are the measuring social referrals exactly?
What’s important to note is some retailers are a lot more social sharing friendly than others, both with the technology they install on their site and their products themselves. The results vary drastically from brand to brand, at inSparq we saw some retailers generating 7% of their sales via a social referral on Black Friday and some similar to IBM’s numbers. Not time to write off social commerce just yet.
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