In its second-largest acquisition, Amazon buys the company for $970 million.
How the social network's new marketing tools more effectively drive sales.
Who says you can't generate sales from social networks? Well, plenty of experts do, including Forrester Research Inc., which recently reported that less than 1% of 77,000 purchases in April on the sites of retailer clients of GSI Commerce, an e-commerce technology provider, could be traced back to social links. But your results may vary—especially if you're targeting a younger demographic and take advantage of some of the new marketing tools that social networks like Facebook Inc. and Twitter Inc. have introduced as they seek to turn their popularity into revenue.
Consider, for example, JackThreads.com, a flash-sale e-retailer that sells trendy fashion for younger men. More than 15% of JackThreads.com's traffic stems from Facebook, according to Kantar Media Compete. And the conversion rate for those shoppers is roughly double the site's typical 1.30% rate. "Those shoppers are providing a lot of value," says Garett Press, the retailer's marketing manager.
JackThreads is driving traffic from social networks in a number of ways, including by using a tool called Promoted Posts that Facebook introduced in May to allow marketers to put their messages before more of their Facebook fans. Bonobos, another apparel retailer targeting younger men, uses a similar Twitter service called Promoted Tweets, and reports early success with Facebook Offers, another new ad format from the world's largest social network, which recently announced that its user base had reached more than 1 billion.
It may be that retailers like JackThreads and Bonobos can be more successful with these marketing tactics because they target younger consumers than those of GSI Commerce's clients, which include major retail chains and brands—Toys 'R' Us, Sports Authority and several major sports leagues—whose customer bases are broader. But their success at driving sales from Facebook and Twitter may also stem from their agility. And being nimble will likely continue to be important when it comes to social media marketing as Facebook, Twitter and up-and-comer Pinterest steadily introduce new marketing tools they hope will drives sales for retailers and new revenue streams for the social networks.
'Happy hour' sales
That's not to say retailers only engage consumers on social networks to directly drive sales on their web sites or in their physical stores. Bonobos Inc. for instance, is active on Facebook and Twitter with the aim of building brand awareness, fostering customer loyalty and responding to customer complaints.
But ultimately all those elements are geared toward boosting sales, says David Fudge, director of consumer engagement and innovation at Bonobos.
"When we engage on social platforms we're doing so in a way that is organic, humanized, conversational and relatable, and that helps us build our brand," Fudge says. "And, in selling our brand, we're also selling our products."
One way the online-only apparel retailer does that is with Facebook Offers that promote its Friday "happy hour" sales. Offers enables retailers like Bonobos to present deals, like 20% off wool dress pants, to its Facebook fans in their news feeds. That's the section of Facebook that displays updates from a shopper's friends and companies they're fans of and where Facebook users spend 40% of their time on the social network, according to Facebook. Consumers can claim the deal with a single click, and then redeem the voucher at Bonobos.com.
Bonobos also occasionally offers 24-hour Twitter-exclusive, or "Twixlusive," sales for products like a limited-edition pair of $175 glow-in-the-dark pants it sold in late September. The deals unlock once a predetermined number of shoppers retweet the deal.
While Fudge declined to comment on how many sales typically result from Facebook or Twitter deals, the shoppers who click from social media to its site have a clear "intent to purchase," he says.
A sense of urgency
At JackThreads.com, marketers aim to stand out from the clutter of Facebook posts with offers that demand immediate action. For instance, every few weeks the retailer offers its Facebook followers what it calls "Coupon Quickies," coupon codes offering enticements like $10 off a purchase or free shipping, but are available only to the first 100 consumers who enter the code on its site.
"It drives a sense of urgency," Press says. "The redemption is usually full within less than an hour. Our customers are discount shoppers so they're really excited when a coupon drops."
That's the same idea behind Offers, which Facebook launched earlier this year as a free tool that marketers can use to create promotions that appear in consumers' news feeds. The social network in September began requiring businesses to pay for ads that increase the prominence of the Offers. Budgets can range as low as $5, although costs vary depending on the number of Likes on a brand's page.
Along with the requirement that merchants tie ads into their Offers campaigns, Facebook also began sharing the news that a consumer claimed an Offer in his friends' news feeds. Having that information shared in the news feed spreads news of the deal, Fudge says.
Since Facebook's shift, some of the Bonobos' Offers, such as 30% off sale shoes, have been redeemed by more than 5,000 consumers, a far cry from the few hundred that typically redeemed its earlier Offers. While Fudge says that Bonobos hasn't been using the revamped tool long enough to provide conclusive results, he says the number of consumers who redeem Offers then convert on Bonobos.com has jumped.
Facebook also introduced another new marketing tool in May called Promoted Posts, which, like Promoted Tweets on Twitter, allows an advertiser to promote its own posts or the posts of their fans that mention the brand.
That's attractive to advertisers because, without the ads, a consumer typically only sees about 16% of the content her connections—including retailers she's Liked—post on the social network. That's because Facebook selects what it believes are the most relevant posts to display in the "Top Stories" section of the individual's news feed. Facebook makes those judgments based on the consumer's posts, Likes and other actions on the social network, said Mike Hoefflinger, the social network's director of brand product marketing, at the Facebook Marketing Conference in February.