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Posts Tagged social commerce

Social media complements search and email marketing (for now)

Looking at this Forrester post almost a year later feels a lot like going back to high school after your first year in college. You thought it was a good idea to visit but then you realize by the end of it — not so much.

The blog post’s conclusion is to draw your own conclusion about social media’s impact on holiday purchasing. The post meanders from having an opinion that the ForeSee research was limited to having no point of view whatsoever. How am I going to join a conversation or rebut your point of view if you don’t have one?

While there are no official rules to blogging – the universal and unspoken rule is to have an opinion.

Here’s mine: The idea of social commerce (buying stuff on Facebook) is still a pipe dream. Rather, social media can drive brand, product and deal awareness and therefore serve as a complement to a retailer’s larger search and email marketing programs.

Since this post in late 2010, LinkedIn and Groupon have gone public. Facebook’s IPO has been delayed – but will be the biggest one in the history of ever. The point being, these companies are all well capitalized, have hundreds of millions of subscribers and are not going anywhere. So industry pundits and luddites alike need to bite down on the reality that marketers will continue to throw marketing dollars at them to hock their wares regardless of whether we have any proof of a causal relationship between the social media consumption and clicking the “buy” button on a shopping site.

At 2.9% e-commerce conversion rates there is no proof needed.

While this question of “Was social media a big factor in holiday purchases?” will come up again and again over the next few weeks and months, I encourage marketers and PR people to do one thing:   challenge the question.

As Augie Ray correctly points out social media is a mere infant and it will take time to prove its correlation with purchasing behavior. In the meantime it serves a lot of other organizational needs that are no less important than shopping cart clicks. Don’t get suckered into the conversation about social media and its impact on transactions because you’ve got more to attend to with your 2012 social and media dollars such as:

  • Reputation management
  • Product and corporate branding
  • Influencer relations
  • Partner relations
  • Customer service
  • SEO
  • Issues management and crisis communications
  • Recruitment and workforce engagement

While the analyst community continues to look under the hood for purchase conversion evidence, what they’re missing is that the owners of these social media programs may not at all be focused on driving holiday (or non-holiday for that matter) transactions.

Pause.

Bite down. Chew. Gulp.

And therefore, there might be some reason why the transactional or purchase conversion evidence is not to be found.

In fact, most brands and retailers I know are still investing more in tried and true search and email marketing initiatives to drive transactions and conversion online and in stores –- while using Facebook and Twitter as complements to those initiatives and for all of the other communications objectives listed above. That explains why search and promotional email remain the primary drivers for purchasing behavior for the holidays.

There. I said it.

Don’t go back to high school. But do take my poll on LinkedIn

-Jose Mallabo

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Social vs. professional graph: Are the days of separate online identities numbered?

About 6 months ago I posted something on my Facebook account that had nothing to do with work.   It was a rant about a sales guy trying to sell me something completely unnecessary for my motorcycle.  Two days later, a friend on Facebook and superior at work asked me about it at work – the implication being that I was ranting about the workplace – where we ironically extolled that the social graph (or identity/profile) was and should be separate from the professional graph.

Facebook CEO Mark Zuckerberg has been emphatic about a singular online identity – which obviously paves the way for Facebook Connect to be the way people log in anywhere online.  He’s quoted three times in The Facebook Effect saying: “You have one identity.”

And that…“The days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end pretty quickly.” Further challenging the current separation of the social and professional graphs by saying: “Having two identities for yourself is an example of a lack of integrity.”

Well, we know how he feels about it.

In turn, LinkedIn CEO Jeff Weiner has maintained that the separation between social and professional graphs is vital to professionals and to LinkedIn.  At last fall’s Web 2.0 Summit in San Francisco — in his “keg stand” interview — he told John Batelle:

“While many of us in college probably were at parties having a good time, doing things like keg stands, or being exposed to keg stands, I don’t know that many of us would look forward to having a prospective employer have access to picture of those events.”

Who’s right? I’m less confident in the separation between the two than I was just 24 hours ago.

At a recent Ragan social media conference I attended, Shel Holtz echoed Facebook’s stance in his own inimitable and convincing way.  Of course, I Tweeted at him about this while he was presenting.

If I’m answering Shel literally, I’d say “see the first paragraph of this post.”

But I had to test this just a liiiiittle bit more.  The attendees of this conference were a better cross section of U.S. professionals than the early-adopting, Banana Republic-wearing, all technology-loving dot.com crowds that populated the early social media conferences. Insurance. Federal and municipal governments. Universities. Healthcare organizations. And, even the country’s largest cemetary.

They were all in the house — represented by professionals from every generation in the workforce today.

These are people working for really big, very regulated, widely and deeply impactful organizations from never-go-away industries — all there trying to figure out where to place their social media bets and budgets.  Shel’s point may be the most thought provoking point made out of all the sessions.  Because none of us are over-staffed or walking around with extra dollars pouring out of our back pockets, picking one may be a choice we’re forced to make.

So I put the question to the attendee group to see what they thought about the separation or blurring of social and professional graphs.  That group was on Facebook.  I’ll post the comments as they come in.

I’m not a Dead Head, but as I sit here during business hours while at the dealer getting my car repaired working on a post that has benefits to both my professional and personal brand, it’s hard not to think that maybe Shel has spoken for many of us.

My car is ready.  Back to the work.

- Jose Mallabo

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Groupon: I’m starting to get it

Call me dense, but since I joined Groupon this past March to stay informed of the next big thing, I’ve struggled to get it. By get it, I mean the way real fans of baseball the game get it. Like the way PR people get it’s not about just writing press releases (like my mother always asks.)

I'm still waiting for that Groupon for a Ducati. Until then mani-pedi's keep filling my inbox.

As an industry person in the social and e-commerce world, I didn’t quite get how it made money. And, as a consumer, I didn’t feel like the offers were relevant to me as a 41-year old male with more gadgets and clothes than I’ll ever need.  Seriously, how many massages and facials does a person need? All I know is that I get an email from Groupon every morning as I pour my coffee. I’ve deleted 100% of them before I finish my first cup.

Now that the hub-bub over the Google bid for Groupon has died down and the geekorati media have stopped fueling the irrational exuberance, the old world media have come in and done a better job explaining what the heck this thing is. Thanks New Yorker. Thanks Wall Street Journal. I heart your sanity.

What I’ve learned:

  • Groupon will do about a half a billion dollars in sales this year and has been profitable since the start
  • Has 40 million subscribers in 150 cities around the world
  • Promotes ~650 deals each day and more than 95% of those tip
  • Upwards of 26 million Groupons have been purchased world-wide
  • Groupon’s typical subscriber is in the sweet spot for just about every marketer: female, between the ages of 18-34, single, and makes more than $70,000 a year.

Clearly, it’s not going away. But I look hard at this insanely crowded market that is quickly becoming a real social commerce segment and part of the overall retail segment and I just don’t see how Groupon’s model is defensible.  What gnaws at me is this question of whether the the $6 billion offer is going to be bubkes in the log run? Odds are, it was a mistake to pass on the cash infusion and barriers to entry Groupon would’ve gotten from it. The big boys with their balance sheets and Bain consultants are coming after this market through acquisition and organically.

Bubkes or not, 2011 is going to be a very interesting year in e-commerce.

-Jose Mallabo

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My big fat wallet

It was starting to look like Costanza’s exploding wallet. So I dumped it out and out came a handful of receipts and a packet of Splenda — but mostly the pain in my right cheek was the heft of four gift cards. Each of them are about a year old – from last Christmas, of course.  The grand total of money on my unused cards = $150 – or about a week’s worth of groceries for a hungry vegetarian.

Wonder how many Macy's gift cards were in there?

With just two weeks before Christmas, I’m sure there are people who fully intend to buy actual gifts for their loves ones but will likely get too busy and end up buying a card off the end cap at Safeway or Genuardi’s instead.

I’m not judging you. We’ve all done it. Just know there’s a good chance that you’re taking your $20 or $50 bill and tossing it out the window of a moving car at night in a neighborhood you’ve never been in before.

Americans spend $65 billion on annually (a 2009 estimate) on gift cards with almost $7 billion of it going unused. That’s one tenth of the gross domestic product of The Netherlands. With 309 million people in the U.S. that’s roughly $23 per person in the U.S.  Based on that, I am seven times less likely to use gift cards than the average U.S. consumer.  Maybe a better way to look at it is the people who intend to buy me gifts are seven times more likely to forget.

It’s debatable.  In a pinch, I take PayPal.  And I use it most to buy gifts.  So, odds are if you PayPal me money, it will come back to you in the form of a durable good or White Elephant.

Imagine if the state governments took PayPal.  Now that would be true social commerce. If they did they wouldn’t have to use tax payer’s money to chase down unused, but already taxed money sitting on gift cards.

Gift cards are part of the country’s hidden economy that includes mail-in rebates, flex spending accounts and extended product warranties. Money spent but left unused like that yarn cardigan from your aunt Martha from Pasadena.

People freely buy a gift card for someone (who may not use it), but flee the register if asked to buy an extended warranty on a $59 DVD player.

- Jose Mallabo

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Sudden hotness: Social + E-commerce = Social Commerce

Amazing how hot the juncture between e-commerce and social networking has gotten. It’s simple, really. E-commerce is eating into the overall retail segment. And, marketers go where the crowds are. Right now those crowds are not on AOL or WPIX (except for this page about Victoria’s Secret). They’re on Facebook and Twitter.

I remember having some very heated dialogue over using ‘social commerce’ as a thought leadership position within the corporate PR program at eBay about 3+ years ago.  I don’t recall what side of the argument I was on, but needless to say, despite the PR agency’s best efforts (you know who you are) to make it real, it took a Joe Pesci pen to the neck (Nicky in Casino) and never saw the light of day.

Until now.

Sudden hotness has arrived in that kink of a place where social and commerce are meeting.

After CyberMonday all the rumors were about Google to buy Groupon for $2.5 billion (Kara Swisher reports the offer is $5.3 billion). A colleague of mine asked if they’d call it Goopon? Heck, for that mountain of money, they can sponsor the TSA and rename it Gropeon. Today, Payvment announced a $6 million round of venture financing. In recent weeks Facebook has launched Deals to sit on top of its Places product. And, all you need to do is do a Twitter search for #CyberMonday to see how much traction commerce gets on Twitter.

So, while TechCrunch ponders if Amazon missed the boat on social commerce the reality is we all did. Or we would’ve called Nicky and his pen off back in 2007, created a Moto RAZR app for surfing the Urban Outfitters page on Facebook and retired on Black Friday 2009 on the speculation that Google was going to buy it.

Lesson of the day: A lot of the time the PR firm is right.

Update 1:  Dec. 2: Groupon: In the days since Mashable posted the Google buys Groupon rumor, most of the banter has been about how sexy the deal is. Rumors about M&A are dead sexy and dramatic. But we all know that most deals don’t work. And the honeymoon usually ends quickly once the hot company gets ingested.  I’m just happy someone is giving some sound analysis to this deal before it gets done.  Thanks, Sucharita.

Update 2: Dec. 3: Milo.com: Having worked with eBay Classifieds Group before and while classifieds was being integrated into the eBay.com marketplace, I find this $75 million deal to buy Milo.com…fascinating. I have to figure it out in light of all the above, eBay’s constant refrain about mobile as well as it’s M&A history. More later.

-Jose Mallabo

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