Social Commerce

Social Commerce as Antidote to Social Media Snake Oil

It has become fashionable to knock social media marketing, the promotion of goods and services using social media.

For example, BusinessWeek last week published an article likening social media marketing to snake oil, adding to the dodgy image of social media marketing consultants as hype-merchants and charlatans, a motley crew of re-converted estate agents/realtors, Feng Shui consultants and life coaches.  Where’s the evidence, the article asks, that marketing investment in social media is sound investment, that it delivers on the effective and reliable promotion of goods and services?  There’s only so many times we can call upon Dell’s unverified claim that it’s sold $3m+ by tweeting deals.


So just as 2009 began with social media marketing sat atop of a precipitous peak of inflated expectations in the technology hype cycle, at the end of 2009 we’re languishing in the depths of a trough of disillusionment.  The hope is that in 2010 we’ll be on the slope of enlightenment, realising that social media is just media, eschewing talk of marketing RevOlutIons for talk of marketing ROI.  People like Olivier Blanchard are trailblazing here, and I think it’s here that social commerce also has something useful to contribute…


In many ways social commerce is social media marketing, just with a specific focus.  Social media marketing is the promotion of goods and services using social media, where social media is defined as online media that supports social interaction and user contributions.  Social commerce is the promotion of online sales of goods and services using social media.

From this perspective, social commerce is a subset of social media marketing, and whilst both use the same social media tools such as blogs (Twitter), social networking (Facebook), media sharing (YouTube, Slideshare), wikis (Wikipedia) and forums (TripAdvisor) to promote goods and services, social media marketing has a broader remit; including promoting offline sales, or not promoting sales at all but rather promoting general awareness or reputation – so-called ‘brand-building’ (building positive associations in the mind of the audience).  Of course, social media marketing itself is but a subset of social media business applications; notable others being knowledge management, human resources, customer services, internal/partner communication and market research).

So what has social commerce to offer in social media marketing?  In a word, monetization.  Social commerce makes measuring the value of social media marketing easier, because the goal is to promote online sales, an outcome that has a clear financial value.  With social commerce, it is possible, using analytics software, to model the sales contribution of social media and therefore quantify its marketing value (essentially by combining the impact of increased traffic due to improvement in search engine rankings with the differential value of customers originating or interacting with social media prior to purchase). For example, software company Bazaarvoice has demonstrated that exposure to onsite customer reviews significantly increases conversion and average order value.  Likewise, DecisionStep has shown that implementing its social shopping software can measurably increase order value.

It is this monetization of social media that makes ROI (return on investment) calculations possible, which in turn makes it easier to assign budget to social media marketing, by comparing the cost of driving $1 sales with social commerce to other marketing investments. Whilst it is possible to make ROI calculations with other forms of social media marketing, the focus of social commerce on e-commerce sales makes such calculations easier to perform.  The ROI on social commerce investment is simply the sales impact (plus any cost savings made on customer acquisition, service and retention), divided by investment cost.

Social commerce can also add to the debate over the value of social media marketing by virtue of the fact that it is more evolutionary and less revolutionary in character. Social commerce is more compatible with more marketing strategies because it does not require reinventing marketing or reengineering entire businesses to work.  Social media marketing gurus all offer broadly the same prescription – be honest, be conversational and cede control.  Laudable perhaps, but not particularly compatible or consistent with how most marketing is done today.  Social commerce, on the other hand, is more modest in its aim, it simply seeks to boost e-commerce growth and profitability using social media.

Chartered psychologist specialising in consumer behaviour, wellbeing and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

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