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The effect of social media on commerce

Kevin Paolino
VP, Revenue
Thursday, February 28, 2013

Social media has had a dramatic influence on brand and consumer conversations, and many companies are still figuring out how to fine-tune their strategies. Many businesses leverage networks like Facebook primarily to promote deals or direct traffic to website content. However, the best approach is often a holistic one that connects multiple campaigns together, giving the business an active presence and spreading brand awareness. Tim Grimes, strategy manager at mycleveragency, recently wrote an Econsultancy blog post in which he explored the effect social media has had in the commerce sector

"Referrals from friends have also proved to have a significant impact on typical buying behavior, and for this reason social influence is why marketers get excited about the potential of social networks," Grimes wrote. "However, although the potential is there, marketers and brands still need to understand the relationship between sales and influence. Friends clearly have some impact on buying decisions across social media but to what extent?"

Social media produces a number of advantages such as consumer engagement that are not as easy to quantify as a metric like direct conversions. While there are measurable data points that can offer an idea of how engaged a visitor is, some of these are subjective. For example, a company looking at total page views may think its web content is highly engaging. However, such metrics by themselves do not necessarily mean that visitors had positive experiences. In an effort to better evaluate the effectiveness of social media, Grimes highlighted several relevant findings, including: 

  • Consumers are 71 percent more likely to buy a product based on a referral from social media.
  • The majority (70 percent) of adults who are active on social networks shop online, making this group 12 percent more likely to do so than the average internet user.
  • Of consumers that use Twitter for recommendations, 48 percent said they bought the suggested product or service.

One area that has been lacking, according to Grimes, is the ability to connect discounts and other deals to social media. He suggested that it would be beneficial for companies to offer discounts to their biggest social media influencers, but there hasn't been a solution to aggregate and monitor a user's level of influence. This may change as ecommerce hosting platforms evolve and analytics technology accommodates more sophisticated marketing needs. Grimes highlighted the release of PeerIndex, a tool that can track social media activity and offers coupon codes accordingly. 

Mobile social networking gains traction
The value of social engagement is likely to become greater as consumers connect to Facebook and Twitter more often. Internet Retailer managing editor Bill Siwicki highlighted data from a recent industry survey that found between 80 and 85 percent of smartphone owners in Europe and the United States use their devices to access social media content. The research found the highest rates of social media usage was in the United Kingdom, where 86 percent of smartphone owners use dedicated apps or mobile web browsers to access Facebook and Twitter.

"These mobile users posted, tweeted and updated their status across more than a dozen top social media apps for an average of 10 hours and 56 minutes in the month of January," Siwicki wrote. "These panelists also socialized on the mobile web an additional two hours and 43 minutes in January."

As new devices enter the market, businesses can benefit significantly from adopting flexible mobile hosting solutions and integrating their social media, advertising and website content campaigns.