E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Social networks offer retailers easy, inexpensive access to millions of consumers. But does ROI exist in this new style of marketing?
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.
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.”
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.