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).
- 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.
- 60% of soft goods transactions came to retail websites directly from email and search
Transactions That Started With Search Or Email During Key Dates (Percent Of Transactions) |
||||
|
Hard goods |
Soft goods |
||
|
|
Search |
|
Search |
Holiday (excluding key dates) |
22% |
17% |
37% |
23% |
Thanksgiving weekend |
26 |
14 |
40 |
20 |
Cyber Monday |
31 |
15 |
44 |
18 |
Source: Forrester Research, Inc., May 2011 |
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.
Thanksgiving Weekend Purchase Path For Hard And Soft Goods Buyers (Percent of Transactions) |
|
Hard Goods |
|
Touchpoints |
% of Transactions |
Organic alone |
19% |
Email alone |
13% |
Email + other |
13% |
Affiliate + other |
10% |
Organic + other |
10% |
Affiliate alone |
10% |
Search alone |
9% |
Search + other |
5% |
Display + other |
4% |
Comparison shopping engines alone |
4% |
Comparison shopping engines + others |
2% |
Display alone |
<1% |
Social networks alone |
<1% |
Soft Goods |
|
Touchpoint(s) |
% of transactions |
Email + other |
22% |
Email alone |
18% |
Search alone |
13% |
Organic alone |
10% |
Display+ other |
10% |
Search + other |
7% |
Affiliate alone |
5% |
Affiliate + other |
4% |
Comparison shopping engines alone |
3% |
Comparison shopping engines + Others |
2% |
Social networks alone |
<1% |
Social networks + others |
<1% |
Display alone |
<1% |
Source: Forrester eBusiness research in collaboration with GSI Commerce Holiday Season Marketing Attribution Research, May 2011 |
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 report concludes with these "takeaway" recommendations
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:
- 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
For additional information and access to the complete report, please visit here.
COMMENTARY: Forrester Research and GSI Commerce's study on the effectiveness of social media advertising in driving online sales coincides with other similar studies. WebTrends calls social media advertising clickthroughs "abysmal".
The Forrester/GSI study was confined to the busy Christmas shopping season, which is even more damning, because if social media isn't effective during the busiest shopping period of the year, when shopper's are in a shopping mood, what does this tell you about its effectiveness during the rest of the year.
I have said it before, but I will say it again, social media is a terrible advertising channel.
- The ad-supported revenue model of social media sites is deeply flawed. It was a "quick-and-dirty" attempt to monetize social media. Facebook borrowed the ad-supported revenue model from Friendster, and it has remained pretty much about the same ever since.
- The number of social media users is finite. Social media user growth is no longer exponential, and user growth rates will continue to decline over time.
- The ad-supported revenue model of social networks has also reached a critical inflection point where user growth is no longer exponential, with growth in users and ad revenues slowing, and eventually peaking.
- Only 12% of corporations believe they are using social media effectively.
A similar pattern has developed with location-based social networks, which are practically useless for generating revenues for ther following reasons:
- 11 Reasons why very few people are using LBSN's
- LBSN check-in services are basically worthless for generating revenues.
- LBSN's have serious adoption issues, particularly among females.
- Social networks have the lowest revenues per user of major technology firms.
Social networking sites generated only 1% of total social media advertising revenues. That's pathetic dude.
Courtesy of an article dated May 11, 2011 appearing in MediaPost Publications Research Brief
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