Vouchers and incentives: Gifting is virtually out of this world

Gift giving via social media is going mega in 2013. Facebook, after acquiring gift app Karma last year, has launched Facebook Gifts and more recently Facebook Cards, which enables users to send gifts to their friends on the platform with a reusable gift card.

“It didn’t surprise me that Facebook, in trying to find new revenue potential from ecommerce, chose gifting because it’s inherently social – from one friend to another, and it has that data [to collect],” explains Zach Smith, founder and chief executive at social gifting service Boomerang.

Launched initially in the US, where egifting accounted for just over $1bn (£65m) of the $100bn (£65bn) US gift card industry in 2011 and is expected to grow to $11bn in 2014, Facebook Cards has attracted brands such as beauty retailer Sephora and homeware store Target.

Aaron Forth, chief operating officer at social gifting app Wrapp, says: “The US is definitely the largest and most mature gift card market in the world and egifting is coming on fast. In contrast, the UK is still warming to egifting but it’s getting more popular everyday and we’re seeing steady growth.”

Wrapp, which allows consumers in eight countries, including the US and the UK, to send gifts to people in their social graph with free and paid digital gift cards, announced earlier this year that it had reached more than 1 million active users in the 14 months since it launched.

To put this in context, Pinterest hit 1 million unique visitors 20 months after its launch, Twitter 24 months and room letting service Airbnb 30 months.

Another major brand to jump on the social gifting bandwagon is Amazon. Last Christmas, it teamed up with JibJab, the company behind viral video hits such as Mad Men Yourself, to release customisable video gift cards.

The giver was able to choose a musical theme and in keeping with other JibJab videos, could replace the faces on the avatars with photos of themselves and their friends and family.

The cards were highly shareable and Amazon prompted givers to send them publicly over Facebook; the gifts thereby acted as advertising to the recipient’s friends. Those who received cards were also encouraged to share the videos on Facebook, Twitter and Pinterest.

As social gifting gains momentum, service providers are multiplying rapidly. In the UK, DropGifts, Wrapp and gifted2you are some of the platforms available to brands, while in the US there is Boomerang and Gyft.

These platforms allow people to purchase gift cards, as well as offering free cards or money-off vouchers.

“It opens up a lot more opportunities for gifting,” explains Smith at Boomerang. “We’re able to help users discover all these reasons to give gifts and to do that easily. In the offline world it’s more of a challenge – there’s not the same serendipity. You’ve got to go to the store, buy a gift card, have an event in mind. When it’s digital I can remind you via email that friends have birthdays this week and while you’re in front of your computer, in 30 seconds or less, you can choose a gift for them.”

One brand that has partnered with Wrapp is Slurp.co.uk, an online retailer selling wines, beers and spirits (see Q&A above). “Wrapp seemed like a fantastic opportunity to attract a younger, socially mobile and engaged audience,” explains head of marketing Emily Acha Derrington. “The nature of Wrapp encourages social interaction and, although the take-up initially was small, the reach of the platform has been fantastic.”

One advantage for consumers of gift giving via social media is that it makes clubbing together to buy a present easier. The Gift Voucher Shop (GVS), for example, offers group gifting through its One4All brand, in partnership with friendfund, which allows several people to put money into one pot.

Givers can decide on an amount for the selected gift card and invite friends to chip in via their Facebook and Twitter accounts. The fund stays open for 10 days. The money is taken from everyone’s accounts when the last person has chipped in and the total has been reached.

“Like social media, gifting is about sharing, so the combination of the two is a natural progression,” explains Michael Dawson, chief executive of GVS. Another bonus, given the recent controversy over the redemption of gift cards when companies go into administration, is that the GVS’s group gifting is guaranteed by e-money regulations, so consumer funds are protected.

Many gift cards on social gifting sites are, in reality, promotional offers. Offers currently on Wrapp for example include a five-day guest membership at Fitness First and £20 off a subscription at dating site eHarmony.co.uk. Users also have the option of boosting the promotion by topping it up with their own money. Although this encourages users to gift give more frequently, it has also created some confusion in the market.

“Social media and digital is extensively used for couponing, so one of the challenges is to ensure that when someone on a social media platform receives a gift card, that they recognise it is exactly that, a gift card or voucher. It’s for the full amount of money loaded and there are no strings attached,” explains Andrew Johnson, director general of the UK Gift Card and Voucher Association (UKGCVA).

The benefits for brands of adopting a social gifting strategy are numerous, including increased sales opportunities, peer to peer sharing and better positioning for promotions. Many platforms also offer B2B services, enabling brands to send exclusive free gifts to targeted mailing lists.

Boomerang, for example, has partnered with nearly 100 brands to send gifts to their existing customers via social media or email. “Most of them are now running monthly campaigns with us because it’s been so popular among their user bases. We create a landing page where a user can open a card with their name on it and it has a promotional gift card inside,” explains Smith.

Similarly, Asda Business Rewards launched egift cards for Asda, integrated with Facebook, last November. It is the first supermarket to provide this service and since it has been successful with consumers, it hopes to expand into the B2B market.

However, despite the buzz surrounding social gifting, Johnson at the UKGCVA says social gifting is not growing as fast as predicted in the UK.

“Social gifting is behind where we would have expected it to be,” he says. “If you had asked me this time last year, I’d have said that a number of retailers would have launched in time for Christmas 2012, but that didn’t happen.”

Similarly, Facebook’s chief executive Mark Zuckerberg said in his recent 2012 Q4 earnings call that gifting is a small part of Facebook’s revenue strategy.

He said: “While we remain excited about the long-term potential of commerce on Facebook, current revenue from user promoted posts and gifts is very small, and we expect 2013 contributions from these initiatives to remain very small given current run rates.”

Reasons for the slower than predicted growth according to Johnson at the UKGCVA include confusion over whether retailers need to install new technology to redeem digital vouchers in-store and the ability to accept dual tender transactions online.

“There is a desire to capitalise on social media with digital vouchers and there’s definitely a lot of discussion going on about digital and social media, but it’s the practicalities that are holding it back rather than any desire to do it,” he says.

Asda Business Rewards, which only offers paid gift cards, has easily integrated egifting with its till technology, but it is keeping an eye on advances. “We’ll keep up with technology as best we can,” says corporate sales manager Joanne Taylor. “It’s a case of looking at social media trends and working out which ones are being used and which will be the best route forward for our customers. What are they doing in social media? How are they using it in relation to retail and their normal shopping?”

With technology advancing at such a rate,it is unlikely that savvy retailers will be holding back for long.