Can Social Commerce Work?

Chris Gorell Barnes, CEO of Adjust Your Set, looks at how retailers can make social commerce work.

A recent eMarketer report published earlier this year showed that the top two areas of investment for retail brands in 2010 are social and video. These two areas are regularly seen as separate tools of the marketers’ trade but taken together, they have the potential to be an effective and powerful combination.

Looking first at social, brands are hurrying to set up online communities in the same way they rushed to set up websites during the dot com bubble. But not many brands or retailers have really cashed in on these pockets of people online. In fact, according to Philip Rinn at Ebay, the UK market isn’t mature enough yet for social commerce – but why is that?

Currently, social marketing is still a bit of a zero sum game. Once an online community is established, marketers are supposed to listen to what consumers tell them and respond in a meaningful way. But there is a significant gap between brands building an online community and then monetising it.

Communities devoid of meaningful activity soon degrade into a reactionary force. Starbucks announced recently that it had 10 million Facebook fans, but what is the brand going to do with these fans now they are there? Maybe it has something in mind, maybe not, but it’s surprising how many companies don’t. Not having a clear strategy is the equivalent of inviting hundreds of people to a concert and then forgetting to hire a headliner. Anticipation gives way to mild confusion as people wonder if they came to the right place, then someone at the back starts a slow hand-clap which gradually swells into a roar, before finally everyone gets fed up and leaves.

It is this ability for social to go badly wrong that Nestle found out to its cost when it built a “community,” then simply served its “fans” with press releases, ending up in the middle of an eco-scandal that created incredibly negative PR for the brand that continues to this day. And as Dr Pepper discovered in the now infamous “one girl two cups” fiasco, not thinking things through in the social space can lead to a world of pain.

Sometimes marketers are lucky, and have fan pages set up without any effort on their part. But even this can be a double-edged sword. Marketers must figure out how to engage with an audience in a way that inspires meaningful and positive conversations, and leads to loyalty and sales. An interesting point from the story about eBay and social commerce is a quote from David Smith, from online retail body the IMRG. He claims that retailers are more interested in reputation management through social media than any active selling initiatives, and to me that is as a direct result of brands failing to take a positive lead. By failing to provide inspiration to communities, they in turn can become introspective, raising the risk of negativity and the need for reputation management.

However, by introducing online video into the mix, with its proven ability to engage people at a far deeper level than static text and images, we can deliver a far more positive online social experience. Great video not only sparks conversation but can also be product-driven. For the social marketer video is a very compelling way to first inspire and then activate the community into which it is placed. Using it can help convert lifeless communities, with a tendency towards negativity, into places filled with passionate constituents loyal to your brand.

And despite what Ebay’s Rinn says, there is movement in the right direction. As pointed out in NMA’s article last week, Dell, Disney, easyJet and P&G have all launched or are launching social commerce plans or tools. If they’re smart and use a proper online video strategy within these communities they will reap the rewards.