Once upon a time, retailers measured success by the number of people walking by in the mall, how many entered the store, the percentage they spent, and basket size. Now, a world of zeroes and ones has changed their perspective entirely. Social media is expected to be the star during the coming holiday season, with retailers pushing Facebook, YouTube, and Twitter content to get in front of consumers and affect either online or in-store purchases. Smaller Christmas budgets are expected, so the fight is on to garner as large a share as possible of a shrinking pie.
Of course, nobody would come out and say, "Social media is nonsense, and I'm not getting anything for my investment." So, when the likes of Starbucks (NASDAQ: SBUX), JCPenney (NYSE: JCP), and Target (NYSE: TGT) say that social media is connecting them with their customers and leading to more effective campaigns and product launches, do take it with a grain of salt. What can't be ignored, however, is that they're committing more resources to social media marketing, even though it's still far too soon to tell if it will be effective.
This is the first year that social media is poised to play a major role. Chris Bruzzo, vice president of brand, content, and online at Starbucks, notes that the industry wasn't this far along last year. This holiday season, though, it's ready to go. Remember, in the intervening year, Twitter popped into the public consciousness, bolstered by a mention on Oprah, for example. Facebook crossed 300 million users (up from July 2009's 250 million). These environments are growing rapidly, have plenty of users already and are almost designed for pushing marketing content.
And, money follows people.
Forrester Research forecasts that social media marketing spending will hit $716 million for the entirety of 2009 and ultimately reach $3.11 billion by 2014. A Shop.org survey of online retailers found that 47.1% intend to amp up their social media marketing this holiday season.
Though new, there are signs that social media marketing is delivering returns. Dell (NASDAQ: DELL) says it's made more than $3 million on sales from Twitter click-throughs. That's not much compared to the company's quarterly sales of $12.3 billion, but it is a start -- with a solid ROI.
For many companies, the challenge will be to follow in Dell's footsteps and figure out how to convert online -- and ultimately profit. Best Buy (NYSE: BBY) is taking an opposite approach, using Twitter to push its "Twelpforce," a quasi-customer service tool through which employees answer questions and offer technology advice. Yet, the results can only be managed loosely in increased basket size and brand loyalty, neither of which can be tracked directly back to the social media effort.
JCPenney is acutely aware of this challenge, having used Facebook to push its back-to-school gear. But, Nick Bombersbach, who covers the social media effort for this retailer, asks, "The question now is how do we turn around and turn that into traffic?"
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