||Social Network Advertising Nudges, Doesn't Drive
According to a recently released report, a collaboration between Forrester Research and GSI Commerce, social media rarely leads directly to purchases online. Less than 2% of orders were the result of shoppers coming from a social network during the holiday shopping period between November 12 and December 20, 2010.
Addressing social marketing, Fiona Dias, executive vice president of strategy and marketing for GSI Commerce, says "...buying things from retailers is maybe 10th on the list of things they want to do on Facebook...from a retail and commerce perspective, social media seems to have no effect..."
She says, though, that social media outreach is somewhat effective for distributing news about short-term deals, as 5% to 7% of purchases are influenced by social media activity.
What does seem to work, says the report, is more traditional online marketing, including email and search advertising. Most consumers in the study were exposed to some form of marketing by the retailers before they made their purchase. 70% of transactions in hard goods categories (like lawnmowers) and 82% in soft goods categories (i.e., clothing) occurred after the consumers had engaged in some interactive marketing tactic before their purchase. 40% of hard goods transactions and 60% of soft goods transactions came to retail websites directly from email and search
The report found that consumers are exposed to online advertising early in the purchase funnel; display ads are the first touchpoint for 13% of soft goods buyers, for instance.
While organic traffic is the most cost-effective way to attract shoppers, it is also difficult to achieve because most buyers simply do not arrive at a site directly. Across the board, the shoppers in this study touched some retail marketing vehicle before completing a transaction. More often than not, these shoppers either searched explicitly for a product on a search engine such as Google or they received the retailer's promotional email.
While many shoppers in this study were only exposed to one marketing program before completing a purchase, many others were exposed to multiple marketing touchpoints prior to the completion of their transaction. In fact, 45% and 53% of hard and soft goods transactions, respectively, touched at least two marketing touchpoints.
While retail marketers employ a variety of tools, "traditional" tactics continue to be most effective, says the report. More consumers who completed transactions during the holiday season touched email and search campaigns in their purchase journey than any other marketing tactic. 40% of hard goods transactions and 60% of soft goods buyers came to retail websites from email and search specifically.
Display and affiliate marketing also exhibit strong influence in the purchase funnel. While search and email get the most credit for driving sales, other tactics like display and affiliate marketing may be receiving less credit than they are due, because most retailers employ "last-click" analysis. Any tactic that tends to be primarily a "first click" will consequently be undercounted in its contribution to sales. Display ads, for instance, are the first touchpoint for 13% of soft goods buyers, but those shoppers then click on other marketing messages, which ultimately receive "credit" for the sale.
Social tactics "came alive" during key dates for soft goods, but social tactics were largely ineffective in driving sales. The data from this study indicated that less than 2% of orders were a result of shoppers coming from a social network.
While hard goods retailers in this study experienced no change in the number of orders that resulted from links from social sites, soft goods retailers experienced a 45% lift in orders that resulted from those same types of links on Cyber Monday versus during the rest of the holiday season.
The most significant finding from this retailer data was that email marketing not only continues to stay alive, but is the strongest tool for reaching busy shoppers. That said, retailers should also consider several other key opportunities that surfaced in the data:
(Source: The Center for Media Research, 05/11/11)
- Attribution modeling is critical. While "last click" is typically the most commonly accepted standard for how retailers look at the effectiveness of their marketing programs, it is an inadequate measure of a marketing tool's success.
- Because shopping behavior around key dates is different from the rest of the holiday season, retailers need to plan accordingly. Promotional dates tend to attract more deal-hunters who are more open to email messages and discovering deals while other dates are more likely to engage "spearfishers," consumers who are more likely to be looking for specific products by using tools such as search.
- Hope for the best, but expect the worst with social. While the usage of social networks continues to grow, there continues to be the hope that they will one day provide a viable marketing vehicle for connecting with shoppers. This past holiday season demonstrated that social networks continue to be inexpensive ways to promote messages and are therefore relatively low-risk.
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