More and more companies use social media for promotion and advertising: as of the report “The Social Shopper”, published in June 2011 by the Economist Intelligence Unit, 56% of retail companies use social media to promote merchandise (both existing and new) and 36% utilize the channel for customer service. Other uses include the offer of coupons and dialoguing with customers to better understand their feeling and preferences.
However, such companies are still trying to find a reliable way to monetize the channel, i.e. to determine the impact on the bottom line.
Objectives of the use of social media, as stated by companies, include increasing brand awareness, improving customer engagement and expanding customer base. Yet, retailers are still looking for a way to link social media to any increase in sales: basic metrics include number of fans or followers, but the majority of executives surveyed by the Economist Intelligence Unit declared that they are doing an average or poor job in effectively measuring social media impact. 32% said that monetization had actually occurred even if they weren’t able to prove it, but only 6% reported that they were able to monetize investments in social media.
A possible starting point for companies can be offering to customers the option of buying merchandise directly through social media such as Facebook, in order to demonstrate a direct link between social media and sales. Too few companies are doing that today, but this can represent the next step toward social media monetization.
1 comment:
I also think monetization of social media has been pretty underwhelming so far, especially when you consider that the perceived upside of the medium is driving some of the insanely high valuations that have been drawing attention of late.
That said, I'd also offer that some of the most valuable aspects of social media are difficult - if not impossible - to measure through straight sales figures. Where lots of companies are benefiting the most from social media is branding and I'm not sure you can really establish a one-to-one monetary relationship there because social media might motivate a consumer to purchase a product online or in-store.
I suppose the takeaway is that social media may end up being like advertising - some of it works...we just don't know which of it does.
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