Bridging the Gap Between Social Media and eCommerce
Date Posted: 2/7/15
Original URL: http://www.tradeglobal.com/blog/bridging-gap-social-media-ecommerce/
So, you’ve decided to put your brand out there using Facebook, Twitter, Pinterest and Instagram. You’ve even assigned a team to post, monitor and respond to comments, confident that these efforts are central to marketing your brand and leveraging social media as a customer service tool. When you check the latest e-commerce metrics, social referral traffic to your site is low and your conversion rate is even worse. Where’s the disconnect?
According to a study from Duke University, brands spend 9% of their marketing budget on social media, but many brand directors find it difficult to quantify the return on investment from their efforts. Despite the large number of fans and followers – and large percentage of budget allocated to social – the ability to turn fans into buyers has been relatively weak compared to other marketing channels.
Nike, Nordstrom and Victoria’s Secret generate, on average, 8.5% of their site traffic through social, yet the corresponding conversion rates can be as low as 0.25%. This seems to be the trend across most brands, which begs the question: Why do brands continue to spend a disproportionate amount of their marketing budget on social media if it results in lackluster returns? In a word, potential.
Evolution of Social Media
The evolution of social media draws many parallels to the evolution of mobile commerce. According to a study by Custora, mobile traffic to e-commerce sites has increased from 3% to nearly 37% in the last four years. Though the mobile conversion rate is only at 1.4%, mobile has become an essential part of the overall shopping experience, and the gap between traffic and conversion continues to shrink.
Social media is evolving in much the same way. Though returns may be low, research shows that social media is becoming an increasingly utilized resource for online shopping:
- 74% of consumers rely on social media to inform their purchasing decisions
- 90% of consumers trust product recommendations from their peers, while only 33% trust advertisements
These stats should give renewed hope to e-commerce retailers struggling to justify their social media efforts. Social media is a form of influencer marketing; e-commerce conversions can’t always be linked directly to a social channel, but that doesn’t mean the purchases weren’t influenced by one.
Social Buy Buttons
In 2015, 5% of all online retail revenue is forecasted to be attributable to social media, representing a sizeable $14 billion. Facebook has represented the bulk of e-commerce revenue over the past three years, garnering an average of 85% of all e-commerce orders from social media. This is expected to change as other social media channels are getting in on the action and optimizing for e-commerce.
Early last year, Pinterest rolled out Rich Pins, which includes Product Pins, for real-time pricing and product availability. Later, Twitter announced a limited, public rollout of its ‘Buy’ button feature to be added to a brand’s Twitter ads. Soon after, Facebook starting testing a ‘Buy’ button on posts, which allows consumers to make purchases without ever having to leave Facebook.
Recently, Facebook has taken its e-commerce strategy in another direction, refining its algorithm to make posts more relevant to its user base. A study completed by PR firm Olgivy showed that the organic reach of posts has dropped by 50% over the past year, with posts now only being seen by 6% of a brand’s fans. To combat this, many retailers are looking to paid social ads. Facebook has partnered with a number of data mining and loyalty firms, such as Datalogix, Acxiom and Epsilon, and enables brands to match Facebook profiles with their in-store and online purchasing history, creating greater visibility and more targeted ads.
What does this mean for you? If you want to maintain visibility with your fans on Facebook, you may need to start paying up.
What about payment on social? This is a new dynamic for consumers and may take some time to gain traction. Social payment tools, such as Snapcash on Snapchat, have been developed to facilitate peer-to-peer money exchange. As people become more comfortable with this type of exchange, it won’t be long before they’re comfortable paying for products through a native social media payment app. This will be attractive to brands for two reasons: First, it creates a more direct connection between the brand and the fan. Second, it will be cheaper for the brand because it will circumvent the traditional credit card merchant transaction fee.
All signs point to social media only continuing to gain momentum when it comes to e-commerce. The owners of social apps know this, and 2015 will see a noticeable increase in apps and features aimed at conversion. So, be sure to nurture those fans and followers. Social media is definitely an investment, but with a little patience, it will pay off.