I decided to use a cartoon (below) called, "Social Media Explained," a humorous take on the specific function of each kind of social medium. The cartoon has apparently appeared in a variety of other media. The cartoon's subject matter, in turn, led me to consider how retailers could make effective use of social media channels, in general, and, more importantly, examine the worthwhileness of social media as monetization venues for eCommerce.
First, the cartoon:
Second, how can retailers make effective use of social media channels?
The Social Media are tools of the eCommerce trade just as pricing intelligence solutions are a (quite different) kind of tool used to optimize margins, manage assortment, and provide a wealth of intelligence information and detail about the pricing and marketing actions of your competitors.
While the Social Media continue to grapple with how to maximize their tremendous base of data (see What's A Facebook Follower Worth? As Businesses Build Marketing Programs Around the Social Network, Some Balk at Paying a Fee to Promote Their Posts, Wall Street Journal), pricing intelligence provides immediate, actionable data, so retailers can set prices (and monetize) quickly, efficiently, and efectively. Monetization via Social Media is quite a circuitous route; social media like Facebook are more suitable for small retailers, niche products, or steeply discounted items, according to a Forrester report -- so social media in themselves are not necessarily a panacea for all retailers.
Many attempts by Social Media to garner advertising revenue have been in development for quite a long time -- they're still trying to figure out how to capitalize on this data to benefit themselves (monetarily), as well as retailers and consumers.
Retailers may appreciate this graphic from eMarketer (below) showing the types of interactions that US New Media Users Look For When Engaging With Companies/Brands Online. It's interesting, but not surprising that new media users cite receiving incentives as most important -- and receiving marketing info as the least important:
Third, here are some ways to use social media to leverage monetization:
1. Use social media as a retention tool (as well as a tool for garnering new customers).
2. Build brand awareness. Use regular media or word-of-mouth to drive awareness and traffic to your social media (Facebook, YouTube, Twitter, MySpace pages).
3. Engage your audience. Social media is about having a dialogue. Good example is pet food company with discussions among pet owners, blog on subjects of interest, answers to questions, etc.
4. Use Media Advertising. Display advertising, Google Ad Words, and "promoted posts." While this type of advertising is of more value to smaller retailers than big retailers, even the small retailers aren't happy with the amount of money they need to shell out to promote posts to the newsfeeds of users who have "liked" their page, plus the "friends" of these users.
5. Do Special Promotions. This is the place for coupons off and discounts exclusively to followers.
6. Brand within applications. Use apps to create something functional that users will like.
7. Set up shop on a social media site. Generate sales and enthusiasm with loyal fans that follow your updates. Companies like 1-800-FLOWERS and 8thBridge now sell from social media websites, or people use them for gift-giving.
8. Drive consumers directly to your own website. There you can do business directly, leverage the value of your own information, data, retention, and customer loyalty.
The paths described above are neither swift nor sure, and, as Forrester noted, the benefits are more for smaller retailers who lack the funds, branding and leverage of larger companies. Regardless, retailers have to know, and participate in, their online community to raise awareness, increase sales, and encourage loyalty. Retailers also have to be aware of privacy laws and regulations regarding the use of social media identities and use of personal information. And, with the growing use of, and need to harness, mobile devices, there's a whole new ballgame for internet advertising, marketing, and socializing.