Gotta Have Friends

Retailers hope that the online social scene will build brands—and produce sales, eventually

On social networking site MySpace.com, members can create their own profile page, posting and swapping with others information on likes, dislikes, favorite music, people and places—and favorite brands and products. Fueled initially by wired youth’s adoption of the Internet as a preferred hangout venue, the growth of MySpace.com, which launched in 2003, is now driven by a broader population. The average age of those creating profiles on the site is creeping up: in August, 65% of users were 25 or older, according to comScore Networks Inc.

It’s adding up to some big numbers, with Nielsen/NetRatings Inc. reporting that MySpace.com had more than 60 million unique users in August, and research firm Alexa Internet Inc. the same month ranking MySpace as the world’s sixth most-visited web site.

Following the crowd

Where people go online, so go marketers. Backcountry.com, for one. The outdoor adventure gear retailer has created branded pages on MySpace for three of its brands that skew toward a younger crowd: snowboard site Dogfunk.com, ski gear site Tramdock.com, and deal-a-day site WhiskeyMilitia.com.

One of the features of a MySpace profile page is a Friends space that displays a count of the page owner’s friends, that is, the number of other MySpace users who have asked to link their pages to the page owner’s page, and have been approved by the page owner to do so. So one driver of user behavior on MySpace is to show popularity by signing up as many qualified friends on one’s profile page as possible.

And where do shopping and driving sales fit into all of this? That’s exactly what Backcountry is trying to determine, and it’s a question that is also top of mind at other forward-looking online retailers as they try to assess the opportunity in social networking and the entire phenomenon of user-generated content that defines Web 2.0.

While user-generated content exists on e-commerce sites and dedicated sites in the form of consumer reviews, social networking sites are something else. These sites exist not for factual content or shopping, but to bring people together online for the purely social purpose of sharing interests, activities, and personal data. They’re some of the most-heavily used sites online.

Testing options

And whether it’s with a branded page on MySpace, getting their name or products onto other sites such as Facebook.com or YouTube.com, or onto other, more targeted social networking sites such as the fashion-focused Stylehive.com, retailers are testing a multitude of options as they seek their place in the new realm.

At this point, most are doing so without knowing exactly what they’ll get out of it or how it might eventually track to sales. And that is a departure for some in an Internet environment where retailers have become used to calculating their precise return on any online marketing investment.

“We’re in a nebulous phase of Internet marketing right now,” says Dustin Robertson, Backcountry.com’s vice president of marketing. “We’re going from all of those things you did to drive traffic in 2002—paid search, affiliates, e-mail. They were measurable. You could hone and refine them. But it’s been honed and refined to death. If we want to leapfrog and get another revolution going, we have to keep moving with the Internet.”

In the still-developing social network space, Backcountry is attempting to figure out the relationship between participation in social networking and e-commerce sales. It theorized that friends on its branded MySpace pages might form the nucleus of a group of online brand enthusiasts that could ultimately drive more traffic to its e-commerce sites. “The model we were trying to prove was: If we get more friends, does that equal traffic to our sites?” says Robertson.

So did the outcome prove the concept? A year into the experiment and some 3,000 friends later on MySpace.com/Dogfunk, the answer is: not yet. Noting that other branded pages on MySpace such as snowboard maker The Burton Corp.’s have as many as 20,000 friends, Robertson says that at 3,000, he can’t find a friends-to-site traffic ratio. But since many other retailers are also just in the figuring-it-out stage when it comes to social networking, he expects to continue the experiment to see where it leads.

Robertson notes that the exploration of MySpace has been a low-cost endeavor, as the brands’ MySpace pages are administered by Backcountry employees who are themselves MySpace participants. “You can’t hire just anybody to do this. It has to be somebody that knows the right tone, what to do and how it works,” he says. “We had a willing labor pool so we can participate at a super-low cost. At a couple of hundred bucks a month, we will probably continue doing it for a while to see if we can make something happen.”

Low cost

Robertson hits on a distinguishing feature of many retailers’ current experiments on social networking sites: They don’t have to cost much. Online jeweler Ice.com, for example, has gained the beginnings of a foothold on video-sharing site YouTube.com using little more than the services of a single videographer and the fertile imagination of executive vice president of marketing Pinny Gniwisch.

After seeing the 1 million views garnered by the humorous family video put up on YouTube.com by one of his employees, Gniwisch decided to explore the opportunity on YouTube on behalf of Ice. Hitting the streets of New York with a video cameraman, Gniwisch conducted impromptu interviews using questions designed to elicit answers in which interviewees mentioned jewelry as the best gift they had ever received.

“Most people did say jewelry, but it wasn’t funny,” Gniwisch says. “I realized after studying YouTube and what was successful there that this wasn’t going to do it. So we went in another direction.”

Gniwisch instead reviewed the 30 hours of taped footage to find the most amusing bits, regardless of the topic, and then put them up as brief videos on YouTube with the identifying tagline, “A project of Ice.com.” A second series of videos was shot in connection with a swag suite of which Ice.com was among the sponsors at the Academy Awards. Gniwisch asked visiting celebrities about their mothers and put up the resulting video footage on YouTube in time for Mother’s Day this year. He also gave viewers of that round of videos the opportunity to sign up for a sweepstakes.

Gniwisch is measuring the success of his efforts in the 50,000 views the videos have received, the 6,000 YouTubers who signed up for the sweepstakes, and the 16,000 who signed up for “Pinny’s World,” with the request to be notified whenever Ice.com puts up new video.

Boosting the mix

Gniwisch says he’s willing to experiment with YouTube as an entertainment venue rather than a purely marketing vehicle for a while longer to see if ROI will materialize. That is a progression similar to that followed by Ice.com’s blog, Sparkle Like the Stars, which was launched to lift search engine rankings but later started producing ROI in the form of incremental sales.

“If I can get enough people to watch my channel, I can eventually throw a product video that is both entertaining and ROI-driven into the mix,” Gniwisch figures. “As more people register to your channel, your ability to succeed as an ROI-based investment is more likely.”

Marketers’ experiments on a third major social networking venue, Facebook.com, have accelerated recently with the launch in May of the Facebook platform. It’s an open application programming interface on Facebook that allows outside developers and not just Facebook staff to launch applications for others to use on Facebook. Some marketers have been quick to seize on the opportunity to create applications that let members of Facebook—at more than 19 million unique users in August by Nielsen/NetRatings’ figures, currently the fastest-growing social networking site—help themselves while helping the marketer.

In August, for example, Internet superstore Buy.com launched a new application on Facebook more directly tied to ROI than many retailers’ current social networking projects. Its Garage Sale service on Facebook uses e-commerce technology Buy.com acquired earlier this year. The application lets Facebook members post and sell items directly on their profile pages. The service charges a flat 5% commission for items sold, with buyers using a credit card to pay for items, and sellers receiving the funds through Pay Pal or a check cut by Buy.com.

Buy.com sees the growth opportunity with Garage Sale in the fact that the application enables users to transition their social networking personal pages, which already garner high traffic, beyond information-sharing. “The purpose of Garage Sale is to offer consumers a means of conveniently posting and selling items on their profile pages. This is a completely untapped area in e-commerce. The opportunities are virtually endless,” says Buy.com CEO Neel Grover.

Figuring it out

While Buy.com’s application on Facebook has a short and direct path to monetization, other marketers exploring social networking opportunities are still figuring that out. For now, they’re willing to participate in the service of other objectives such as brand building.

Those looking for brand awareness from their participation in social networking sites are measuring their success in behavioral metrics. Such metrics include frequency or length of site visits, interaction with site applications and other behaviors that indicate a higher level of engagement, according to Jupiter Research analyst Patti Freeman Evans.

Some developments in the realm of social networking are so new that analytic tools to measure them are just emerging. On Crowne Plaza Island, the real-world hotel chain’s outpost in online virtual world Second Life (see story, page 34), existing analytics packages couldn’t capture what Crowne Plaza considered key performance indicators in the virtual environment. So its interactive agency, Spunlogic, built new tools to do that. The analytics tools track metrics such as the number of Second Life avatars that use the virtual hotel’s conference rooms, popular entry and exit points, and other in-world observations.

A clear view

Whatever their objective, retailers experimenting with social networking sites must have a clear view of their reasons for being there and what they hope to gain, says Freeman Evans. Marketers out to build brand awareness in the demographic of frequent users of social networking sites—as opposed to the broader age range of occasional users—can find value in participating, she says.

“But if you want to ring the cash register, these are not necessarily the places to go,” Freeman Evans adds. “As long as you have your goals set around those parameters, you can make your decision about the level of effort and spending, and where you might want to stick your toe in the water.”