Retailers creating presences on the big three social networks are making minimal investments in attempts to gain maximum exposure. But what is the ROI?
By Bill Siwicki
It begins underwater. Above, the sun hits the surface, creating a glow that casts six figures in shadow, shadows that at first appear to be mermaids swimming gracefully. The figures begin to surface, athletic women in surfwear and bikinis grabbing their boards, waiting. Suddenly the pace quickens and the women are up, in the barrel, flying across the deep blue waves.
Thus begins a 48-minute video from Roxy, a retailer of clothing and accessories aimed at young women with an affinity for surfing, snowboarding and music. The video features an abundance of surfing footage and interviews with the women of Roxy’s Association of Professional Surfers surf team—and it’s free to anyone who wants to watch, because it’s on YouTube.
Roxy posted the video on the social network and video site to get YouTubers—potential customers—interested in its brand. It says women in surfing don’t get near the attention men do, and as such the video presents something not just entertaining but unique and compelling, factors required to stand out among the millions of videos online.
Roxy got much more than it hoped for. YouTube staff came upon the video—“Roxy Presents...Shimmer”—and found it unique and compelling enough to place on the social networking giant’s highly coveted home page for a weekend last month. 48 hours later, the video went from 2,000 views to more than half a million. A lot more potential customers now know the brand Roxy.
Spread the word
Social networking by design fosters viral activity, interactions spinning off in all directions. And that is what Roxy experienced that weekend and during the ensuing days. Viewers of the video shared it with friends, who in turn shared it with friends, and so on. All this activity led to increases in Roxy’s YouTube channel subscribers and views of the retailer’s 40 other videos. Word of mouth then spread the activity from YouTube to other Roxy online locations: the number of Facebook friends and visitors to the retailer’s blog and e-commerce site all increased.
Many retailers question the use of social networks as marketing tools because of the inability to prove return on investment in hard dollars. Roxy says these retailers are missing the point.
“It’s not always about measuring sales or activity on an e-commerce site,” says Chris Todd, director of online marketing at Roxy. “With social networks it’s really about looking at overall brand engagement and buzz. Ultimately that will translate into sales, it’s just not as obvious.”
Many marketers and social web experts agree with Todd, saying it’s difficult to make an argument against free access to scores of millions of potential customers who already have made public basic demographic information and their interests.
“Put simply, it’s such a small investment that any return is great,” says Greg Patterson, chief operating officer at PetsUnited LLC, which offers a MySpace page promoting its Dog.com e-commerce site.
Which is why some retailers are climbing on board the 5-year-old social networking phenomenon. Americans have embraced social networks, adding more content to the Internet by the minute. Big business has set its sights on the networks: In October 2006, for example, Google Inc. acquired YouTube for $1.65 billion. Pioneering retailers spanning size and product categories—from Roxy to Amazon.com and PetsUnited to Bigelow Tea—are creating pages and channels on the networks, building a whole new way of marketing to consumers.
The big three social networks are extraordinarily popular. MySpace, founded in 2003, is the third most visited web site by U.S. Internet users, according to Hitwise, a research firm that measures web site traffic through a sample of 10 million U.S. Internet users. Facebook, founded in 2004, is ninth, and YouTube, founded in 2005, is tenth. Facebook reports more than 70 million active users. MySpace and YouTube do not disclose specific numbers, though those numbers are certainly vast.
MySpace claimed a 4.5% share of all U.S. web site visits in March 2008, though its share has dropped, Hitwise says. For the same time period, Facebook received 0.9% and YouTube 0.8%, their shares on the rise, Hitwise says.
The research firm also measures where social networkers go when leaving the networks, and web merchants should take note: In January 2006, 0.5% of social networkers went from the network directly to a retail site; in January 2008, 3% immediately visited a retail site.
Demographics
While MySpace and Facebook do not report overall demographics, industry experts say MySpace has a great many teen users while Facebook skews toward twenty-somethings. Facebook does report one tidbit important to retailers: Its fastest growing demographic is Internet users 25 and older, people with much more discretionary income than teens. YouTube says its users evenly span ages 18 to 55.
On Facebook, individuals and groups create pages (multiple pages and applications that together are a user’s presence) using strictly defined templates, employing user- and company-generated applications to add rich features and functions. MySpace also offers templates and applications, but its templates can be stretched and even replaced with what amount to graphical overlays. YouTube—where users can create channels, the equivalent of pages—is akin to Facebook, but less robust. It offers only the four social fundamentals: the ability to create a profile, link to friends, share and comment on content, and send messages.
Many retailers new to social networking are gravitating toward Facebook because of its demographics and structure, experts say.
“Facebook users use the network on a regular basis to communicate, they use the message function as a kind of e-mail platform, communicating and sharing content. MySpace is similar to a large degree, but it has a lot of noise where Facebook is a cleaner, more sophisticated experience,” says Todd of Roxy, which offers pages on Facebook and MySpace in addition to its YouTube channel. “And on Facebook you’ll find more users older than 30, creating groups on subjects of interest to older folks. You do not see this kind of behavior on MySpace.”
Tea time
Like Roxy, Bigelow Tea decided to socialize on all three networks. In fall 2007 it launched pages on Facebook and MySpace and a channel on YouTube to spread the word about its teas and, more important, the retailer says, foster strong relationships with customers and potential customers.
“I realize via social networking I may only communicate with 25,000 people this year. But to me those communications allow for a much richer relationship,” says Cindi Bigelow, president of Bigelow Tea. “I can do an e-mail campaign or direct mail piece to millions of consumers but never establish a direct relationship that creates a tighter bond like I can with social networking.”
Bigelow Tea’s Facebook and MySpace pages showcase videos and pictures of tea lovers and products and facilitate customer interaction and feedback. On Facebook it has 140 “fans,” users who link to businesses’ pages, and on MySpace it has 600 “friends,” users who affiliate themselves with a page. Facebook’s “friends” are users who link to pages of individuals. Businesses that establish social network pages typically set them up so they are visible to everyone within a social network, not just friends or fans; as a result, the true number of social networkers who visit a page can be significantly higher.
On YouTube, Bigelow Tea’s video of Los Angeles Dodgers manager Joe Torre and sports announcer Phil Simms extolling the virtues of Bigelow’s teas has racked up more than 2,700 views, and its video of Cindi Bigelow showing how to make a perfect cup of tea almost 900.
“What is wonderful about MySpace, Facebook and YouTube is they give us the opportunity to get our story out in a big way while also connecting directly with consumers,” Bigelow says.
An outside builder
To design and create its Facebook and MySpace pages, Bigelow Tea turned to its marketing and public relations firm, Creative Concepts Consultants, which specializes in social media. The firm worked with Cindi Bigelow and the retailer’s in-house marketing team to craft presences on the two networks. The cost for building and maintaining the social networking presences is built into Creative Concepts’ total annual marketing and public relations budget of between $50,000 and $100,000, Bigelow says.
The MySpace page resembles a conventional web site, with a large company logo, an ample selection of photos and videos, an area devoted to “Top 10 Tea Tips,” graphical links to the e-commerce site and blog, and information shown on all MySpace pages, including pictures of friends and links for MySpace functions.
The Facebook page includes the same kind of content but in the highly structured format of all the social network’s pages. Links on the Facebook page, like those on the MySpace page, take users to sections holding additional content and to the e-commerce site and blog.
Bigelow and Creative Concepts routinely update the tea retailer’s social network pages with fresh content, which they describe as a must for any social networking endeavor.
“If you do not keep network content fresh, you might as well not do it at all. It makes the company look like you don’t really care,” Bigelow says. “This is not an area you dabble in, because people on Facebook and MySpace are serious and you have to be a true partner with them, keeping content fresh, up to date and sincere.”
So far, so good, is the verdict for Bigelow Tea’s Facebook and MySpace pages: The number of friends and fans has been increasing by 10% to 20% every month, and these individuals are driving increased traffic and sales on the e-commerce site, the retailer says.
Man’s best friend
Tea drinkers may be passionate, but few people are as enthusiastic about a subject as dog lovers. This is why PetsUnited decided to go for a walk into a social network. It first stepped into social media with a blog and online forum. The enthusiasm of customers in those venues made it an easy decision, the retailer says, for Dog.com to branch out into social networking.
“Social networking is a natural extension of what we’re trying to do,” says Patterson of PetsUnited, which also operates e-commerce sites for other pets.
PetsUnited launched a social networking page in fall 2007. It has since gained more than 9,300 friends, who post a massive amount of pictures and videos of their canine best friends. The retailer went with MySpace—though it plans to launch a Facebook page—to reach out to young people, a demographic found more on MySpace than Facebook.
“Our core demographic is females 35 to 50 years old with a household income above $75,000, so we’re not doing this for sales today, we’re doing this to prime the pump for sales tomorrow,” Patterson explains. “We want MySpace users to come away from our page with a strong feeling for Dog.com so we will be top of mind as they age.”
The majority of Dog.com’s MySpace page, which took a week for programmers and design staff to build and takes three hours a week for a staff member to monitor, is dedicated to a seemingly endless list of friends’ posts that include pictures and videos. On top are links to the retailer’s blog, online forum and e-commerce site, along with a featured product of the week, a Free Swag contest, and the Daily Howl, often silly thoughts from the staff at Dog.com.
“One of our younger staff members who is very adept at social networking does the writing for it, going after the younger audience,” Patterson says. “What’s nice is we don’t have to take ourselves quite as seriously in this vehicle.”
Adding applications
Like PetsUnited, most retailers in social networks today are creating pages or channels. The big dog, however, is taking a much different approach.
In March, Amazon.com Inc. launched two applications, Amazon Giver and Amazon Grapevine, on Facebook. Social network applications enable all kinds of sharing and interactions and are listed in their own section of a network. Facebook and MySpace users can download an application into their pages; downloading automatically notifies friends of the addition and allows users to invite friends to download the same application.
When friends have downloaded the same application, they then share the functionality of the small program. Applications run the gamut, from sharing content including photos and videos, playing games together, listing apartment rentals, selling unwanted event tickets, comparing movie reviews—the list goes on. Facebook and MySpace offer thousands of applications designed by users, companies and consulting firms that specialize in social network application building.
Amazon Giver allows users to share their Amazon.com wish lists. Based on birthdays provided in the demographic information in Facebook profiles, it lists friends based on whose birthday is next in line. It also looks to the “interests” area of Facebook users to generate product recommendations for each friend. So, for a friend who lists The Police as a favorite band, Amazon Giver will show Police albums and books as well as products based on other interests. A user who wants to buy a gift can link to Amazon.com to complete the purchase.
Amazon Grapevine enables friends to check out each other’s Amazon.com social activities. The application notifies fellow Grapevine friends when someone has added a customer review, updated a wish list or tagged a product.
“Gift giving is a fundamental activity for us, so we wanted to make that convenient for all our customers, to give them a simple interface, through Giver, where they are interacting with their friends,” says Russell Dicker, senior manager of community content at Amazon.com, which also has a Facebook page launched in March with more than 1,000 fans. “And for a lot of our customers, writing reviews and creating wish lists is part of their personas and they can show them off using Grapevine.”
In the first month, 2,500 Facebook users added the applications to their pages. To attract users, Amazon.com promotes the applications on its Facebook page, which staffers in the e-retailer’s community department monitor for customer interactions and feedback on an hourly basis. Amazon.com would not disclose what it cost to build the applications, created in house by its community department. Consultants who build social network applications estimate applications on average cost $10,000 to $15,000—though the cost can go much higher depending on functionality.
Amazon.com says the best way to gain users of an application is to ensure an application can speak for itself.
“The most important way to get the word out is to offer a great social networking experience, which moves people to tell each other about it,” Dicker says of applications and pages. “There are excellent word of mouth features that Facebook has built into its system. And at the core of word of mouth is creating the best experience. Social networking is really powerful, but it only works when you have something compelling.”
Hazards?
Some individuals and businesses, though, see hazards in social networks, such as abuse by individuals or groups of individuals. Some are simply nervous about putting too much out there, in a sense getting too involved in what are gargantuan virtual worlds. “Do I want my name or brand floating about networks for millions of people to judge?” is a common question.
“Negative content may be posted whether a retailer has a presence or not, and the decision not to participate in social technology will not mitigate risk,” says Dayna Bateman, senior strategic analyst at Fry Inc., an e-commerce design and services vendor that has started to educate clients on the benefits of social networks. “Establishing a presence offers a counterbalance. You are out there, you are talking and engaging people, and people can draw their own judgments. And if something negative appears, a retailer needs to post a response.”
If a retailer decides to enter social networking, it should not let the possibility of bad press within a social community deter it from doing what it wishes or being bold, experts say.
“If you are getting into social networking, you have to take the word ‘protection’ out of consideration. Anyone concerned with protecting their brand is not going to be successful in social networking because then there is too much concern and wall-building versus reaching out and sharing information with the consumer,” says Valorie Luther, founder and CEO of Creative Concepts Consultants. “Supporters of your brand want something that is real and human, they want a brand that is honest and approachable.”
And retailers who don’t create a social network presence that is honest and approachable do so at their own risk, says Colin Smillie, a partner at Refresh Partners Inc., a social marketing firm. “I have seen many instances where a brand has ignored social networks and the consumers are left creating their own conversations, with the brand left out of the conversation,” Smillie says. “Not being engaged in that conversation is how brands get in a lot of trouble.”
In many ways, social networks are like customer reviews, discussion boards, online forums and blogs: All involve customer feedback. Retailers can delete content generated in social settings on their own sites; they can do the same on their pages on the big three social networks. But shoppers are savvy and can sniff out too much editing. It boils down to this: Retailers cannot delete what social networkers post on pages or in groups that do not belong to the retailers. These posts will appear, like it or not.
“We’re comfortable with the open environment,” says Dicker of Amazon.com. “We’ve done this on our site with customer reviews and discussion boards. We allow people to say whatever they want about their experience with us on the discussion boards. So that is not something we’re really afraid of. We welcome open and honest comments, it helps us do a better job.”
Return on investment
And then there’s the question for which some retailers demand an answer: What’s the return on investment in hard dollars?
“The reality is most retailers are not currently enjoying sales results from their social network efforts, but they are seeing greater customer engagement and increased traffic to their sites,” says Patti Freeman Evans, retail analyst at Internet research firm JupiterResearch. “Driving awareness and engagement is a good thing. But you need to know that is what you will be getting from these things. So if you measure against sales metrics you will be disappointed. But if you measure against page visits and interactions you will see there is value.”
So far there is no clear way to measure in dollars the value of a social network presence, adds Todd of Roxy.
“Traditional ROI doesn’t apply at this point,” he says. “It’s about participation, the number of friends and fans, the number of users creating content, the number of views of your content—simple counts at this point. And frankly, if you compare that to a print ad, how many people engage with your print ad? You really have no idea. At least with social networks you can see how many people are participating and engaging with you, and what they have to say and contribute.”
bill@verticalwebmedia.com
