Can social media actually generate sales ? – Data

social media players

Do posts or ads on social media sites like Facebook, Pinterest and twitter actually generate sales? According to a new report from Business Insider the answer is emphatically Yes. And growing.

For while direct referrals from a social network may account for only a fraction of sales today, the volume of social commerce is growing quickly – in many cases in triple digits. Overall, last year social commerce sales grew at three times the rate of overall e-commerce.

Some key points from the report:

Social commerce is growing fast

According to the Internet Retailer’s Social Media 500, the top 500 retailers earned $2.69 billion from social shopping in 2013, up more than 60% over 2012. By contrast, the e-commerce market as a whole grew by only 17%.

First click vs. last click

Social commerce is even larger in terms of revenue generation when you look at where consumers begin their purchase process, i.e. first click, (as opposed to using traditional methods such as last click before purchase)

Buy buttons

Growth is very likely to accelerate and conversion rates improve as Twitter and Facebook roll out ‘Buy’ buttons; this will allow social-network audiences to initiate an e-commerce purchase by clicking on a retailer’s post or tweet. Facebook’s tests began in July, Twitter’s in September.

Facebook

Facebook is the clear leader for social-commerce referrals and sales: This is due in large part to the sheer size of its audience — 71% of US adult internet users are on Facebook. A Facebook share of an e-commerce post translates to an average $3.58 in revenue from sales, according to AddShoppers. On Twitter, a share or retweet is worth only 85 cents.

Pinterest

But other sites are gaining, and even leading on, specific metrics, such as average order value (AOV): Polyvore, for example, sees $66.75 in AOV from social referrals, according to Shopify. Pinterest sees $65, compared to Facebook which sees $55 AOV. Pinterest also drives more social sharing of retail content than any other network including Facebook.

Read more here.

Image courtesy of jscreationsz at FreeDigitalPhotos.net

Facebook and the fine art of losing friends

Perhaps it’s only to be expected from a ‘friend’ site created by someone who (reportedly) had few friends, but every time the service makes an announcement it unerringly alienates another tranche of members (or should that be ‘customers’?). And now it’s doing the same with Instagram, the photo manipulation and sharing service it purchased some months ago.

The divergence of interests between the sites and their need to make money, and the users who are used to getting everything for free – and don’t welcome any suggestion that the content, created by them, is to be exploited – is the big fault line now appearing across all new media, and particularly social media.

Here the big problem is, of course, that Facebook was wildly over-valued in its IPO, and it paid far too much for Instagram. The need to start to make money is therefore pressing. But you would’ve thought (with all that money) they might be able to communicate with their members a little better than they are at present. Instead, they seem to see every announcement and every change as an opportunity to lob a metaphorical grenade into the user experience, and then have to spend the next weeks and months clearing up the mess.

I suspect they have little or no interest in the vast majority of user-generated content, but are trying to find a formula that will enable them to jump on the coat-tails of posts that go viral (e.g. gangnam style). Either that, or they’re softening up the members with this stream of smaller shocks so that when they eventually drop the bomb, no one pays it any attention.