PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Marketing through social networks has gone beyond the experimentation stage for e-retailers.
Sixty-four percent of retailers have made investments in social networking and social media while another 22% plan to do so within the next 12 months, according to a new study from Forrester Research Inc. What’s more, 30.5% of retailers say in 2009 social network presences will perform better as a marketing vehicle than paid search or search engine optimization, according to a recent Internet Retailer survey.
“Social networking has gone mainstream,” says Peter Kim, senior partner at Dachis Corp., a social strategy consulting firm. “As a result, we’re seeing many retailers past the point of experimentation and learning, and now working on use and application.”
Migrating to social
Many retailers and social media experts say if a merchant wants to connect with customers and it’s not in the social scene, it’s missing out-big time. Online consumers, for example, now are spending more time on social networking than on e-mail sites.
“If you can be where people are spending so much of their time, that’s the biggest and most effective place to be,” says Dan Shust, director of emerging media at marketing firm Resource Interactive. “You have to get there, then give people things to engage with, things that make them want to come back so you can build a virtual community around your brand. Once you do that, the messaging you can deliver and the information you can provide become much more effective, even more so than mass e-mail campaigns.”
For retailers still considering social media, Matthew Lees, a vice president and analyst who follows social media at the Patricia Seybold Group, a research and consulting firm, draws an analogy between social networking and the Internet.
“For businesses, social networking today is akin to the early days of the web,” he says. “Early adopter I.T. departments were playing around with web sites, and other companies saw them and said, ‘That’s interesting, but it’s not for us.’ Now you wouldn’t think of not having a web site. Social media is having a similar arc, and it’s time for businesses to jump in.”
To be effective with social media, retailers must understand how to operate in this new, evolving realm, a medium very different from anything that’s come before.
“There are many aspects of the social phenomenon that change the landscape,” Lees says. “The scale of the ability to connect and constantly reconnect with people-social media can do things in ways that are mind-boggling if you think about where things were 10 years ago.”
The big four
Retailers can go social on their own with blogs, forums and branded social networks on their e-commerce sites. But the focus of discussion and work today is on gaining a presence on one or more of the “big four” social networks: Facebook, MySpace, YouTube and Twitter. Of the four, the clear leader, experts agree, is Facebook.
“Facebook is best organized, has the best development tools to work with, offers the most ideal overall demographics, is growing as MySpace crumbles, and offers far more functionality than Twitter,” Shust says. “And Facebook redesigned its fan pages for companies in November. Now they’re brand pages, very sophisticated outlets that allow you to do much more with presentation and engagement. And they can run applications within the page on tabs as opposed to having to download them to a user’s page.”
Ultimately, just like with an e-commerce site, retailers must know their audience to be effective with social media.
“The best thing retailers can do right now is to learn as much as possible about social networks and use technologies that will help them be smarter about being social,” says Kim of Dachis. “Data mining and CRM tools-the smarter you are about the data and the motivations behind consumer behavior, the more successful you’ll be in the social realm.”