In its second-largest acquisition, Amazon buys the company for $970 million.
Bloggers are talking products and brands, but should retailers listen? Some merchants are paying close attention; others aren’t impressed. Blogs’ power in retail remains to be seen.
A lot of people have a lot to say about wine, and opinions run the gamut from gushing to harsh. Word of mouth is very important in the wine business, and trying to get a handle on it can be tricky.
Icon Estates, A Constellation Co., which operates wineries with 12 brands and e-commerce site HartwickandGrove.com, last year decided one of the best places to discover and routinely examine word of mouth is the massive blogosphere. It launched a program using social media monitoring and analysis firm Andiamo Systems Inc. One of the first outlets it identified as an important player, based on traffic, links and reader comments, was food and wine blog VinDivine.com.
“In September we did a test with a deep discount coupon for one product, working with VinDivine.com. We shared the coupon with the blogger and he shared it with his readers,” says Matt Wood, vice president of retail operations at Icon Estates. “It was 70% off an expensive wine we were very long on and that we had a margin to play with. The blogger posted the coupon and it boosted sales significantly the next day.”
Bloggers have proven to be a force to be reckoned with in some areas of American life, such as politics. There are more than 75 million blogs on just about every topic imaginable, according to popular blog search site Technorati.com. And there are a plethora that cover retail goods and brands.
“Retailers can choose to ignore bloggers, but a lot of customers are out there blogging about products and retailers,” says Laura Evans, executive director, retail practice, at Resource Interactive, an interactive marketing firm. “The more retailers can hear from their customers, it helps them with product and brand development. Blogs are basically an online focus group happening in front of you every day.”
Retailers who may think they’re behind the curve when it comes to keeping an eye on bloggers can rest assured they are not, experts say. “We’re just in the first inning of retailer innovation on this front,” says Pete Blackshaw, executive vice president of strategic services at research firm Nielsen Online. He also is co-founder of the Word of Mouth Marketing Association. “But we are at a point where you just can’t ignore this. Influential bloggers are impacting perceptions of brands. And they often are a very rich source of insights. Retailers need to pay very close attention.”
But while consultants and researchers urge close monitoring of blogs, retailers’ opinions differ. Some, like Screenlife LLC, find bloggers to be helpful guides to public opinion and important individuals with whom they potentially can establish productive relationships. Others, like Golfballs.com Inc., believe monitoring and working with bloggers is of little value.
“Social media is ramping up-blogs give people forums where they all are interested in similar topics and can congregate,” says Tony Roscelli, director of consumer research at Screenlife, a manufacturer and retailer that specializes in interactive DVD board games. It recently started a formal program through blog monitoring and analysis firm BuzzLogic Inc. to examine blog chatter. “We can tap into these forums and really see what people are into and build products based on that interest,” he says. “We ask the question: Are people online interested in a game theme enough to justify us investing in it?”
But with only 2.6% of U.S. shoppers using blogs when researching purchases, according to a recent JupiterResearch survey, Golfballs.com contends monitoring blogs is unimportant. “It’s not that big a deal at this point. Your resources are better spent elsewhere,” says Tom Cox, CEO of Golfballs.com. “We have affiliate marketing, e-mail marketing, pay-per-click, organic search-I know if I commit resources to these it will get me a return on investment. Blogs are like the newsgroups of a decade ago-they were there, but did they ever move the needle? No.”
Who should listen
Retailers generally have yet to wrap their hands around the blogosphere. While many experts say it is important for most retailers to monitor blog buzz, some types of retailers can benefit more than others.
Merchants that sell goods purchased by consumers across most demographics should be on the lookout, experts say. “In the consumer electronics category, regular product introductions and third-party endorsements drive online conversations,” Evans says. “And word of mouth is vital in fashion, often driven by a variety of sources such as magazines and celebrity sightings.”
Similarly, mass merchants and brands with wide name recognition get more attention in the blogosphere than small, specialty retailers and thus have more to gain from blog monitoring programs, Evans adds. “My firm conducted a study and found that during the holidays, retailers like Best Buy, Target, Wal-Mart and Circuit City topped the online conversations list,” she says. “But conversations are happening in every corner of the web for every vertical, and every brand can benefit from monitoring.”
As blogging about shopping has increased in volume, firms have been popping up that cater to retailers and other companies that wish to monitor and analyze what is being said on blogs about their brands and products, and products and categories in general.
Called blog monitoring, social media monitoring, reputation monitoring, social marketing or word-of-mouth measurement services, these companies include Andiamo Systems, Attention PR, BrandIntel, BuzzLogic, Collective Intellect Inc., Cymfony Inc., Umbria Inc., Visible Technologies and Zeta Interactive. And there is a free but considerably more basic alternative from Google Inc.: Google Alerts.
While the methodologies that monitoring and analysis services use vary, their aim is the same: drilling through the blogosphere on a daily basis to identify blogs that mention certain keywords, such as brand names, and deciphering which blogs and blog posts are the most significant.
Hired by Icon Estates, Andiamo Systems, for example, uses analytics and algorithms to measure five factors, explains John Hingley, founder and CEO. The first is reach, gauging the size of a blogger’s audience. The second is authority, which rates a blogger’s standing by the number of links from other sites to his blog, the frequency of posts, the position in Google’s PageRank system and the ratio of reader comments to blogger posts. The third is influence, which combines reach and authority measures to determine the potential influence a blogger has over readers.