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22 October 2009

What does the future of the social web mean for retail?

Alex Marks, Head of International Business Marketing, eBay Advertising

I was reading an article the other day on a well-respected business news site about the changing nature of the web and I came across the phrase 'social commerce'. Now we've had 'Social Networking' and 'Social Media' which are both part of the 'Social Web' but is 'Social Commerce' taking the concept too far, or does it hold a real opportunity for retailers?

I'm pretty sure the phrase 'Social Commerce' hasn't been trademarked so allow me, if you will, some time to give my own interpretation and what I think are the implications for advertisers.

For us humans pretty much everything has a social implication. We're highly social creatures, and in real life and on the web this is reflected in people forming groups with others of like-minds and discussing things that are important to them. In some circumstances this could well be your product or brand, although I've never been convinced that brands rate as highly in people's lives as marketers like to think.

Since so much of people's social behaviour is now happening online, it's hugely important for marketers to understand the changing nature of where their customers are investing increasing amounts of their times and energy. This is particularly true when other factors, like the current tough economy, are also taken into account. eBay Advertising's research of 1,500 European online shoppers revealed 82% of us are shopping more online in the recession.

Commerce succeeded early online because the internet shortened the supply chain and more importantly, early glitches aside, made it more convenient. And one could argue that, alongside e-mail, transaction was one of the first online behaviours that offered a social and emotional benefit. Before you argue, girls just think how you feel when you buy a new dress and boys, a new car. Please excuse the generalisation for the purpose of making a point.

So as the web has played in increasingly important part in our everyday lives should it be a surprise that the impact is felt amongst the online retailers and how they do business now, and in the future?

No, I don't think it should, but what is social commerce and what of it? For me a large part is going to be about the balance of power. As a result of the socialisation of the web we are seeing growing numbers of communities online. Some are tiny and have modest influence. Others are as big and as complex as cities. As these communities develop and become more self-aware they may decide to impose their will and restrict brands access to them, so brands will have to ask those communities what they might provide in return for the opportunity to sell. To be honest this isn't future-gazing anymore, its already starting to happen.

As consumers we are storing more and more information about ourselves amongst our online communities. So our communities, are by default becoming more responsible for our online privacy, and the decision of what data to share with brands. As tools continue to develop that allow consumers to shape their online experience according to their desires, content providers and retailers will have to adapt to these more personalised demands by allowing their content or brand experience to be dissected and more to order.

And so virtual high streets and markets will continue to evolve within these online communities just like they did in the towns and and villages centuries ago. Just like a concession in Selfridges, it goes to where the people are and not the other way around.

We are already seeing brands helping to facilitate their own communities which are used as a forum for consumer feedback on product, packaging and design. 'Ideastorm' by Dell is a good example of this.

So retailers, listen up. Identify the communities online now that you want to sell to.

Start a conversation. Find out what they need. Start making offers. Put as much effort into your online strategy as you did into your bricks and mortar. Online retail continues to grow at a pace. There's a finite supply of money in the economy. The market will find the balance between high-street and e-street. Otherwise, in the not too distant future you might find yourselves shut out.

22 October 2009

New Ad Tool Can predict the future

Alex Marks, Head of International Business Marketing, eBay Advertising

Next year we'll be millionaires. So I said to my mate on MyTubeFace the other day. And lo, I was approached by all manner of luxury brands intent on gleaning my forthcoming spending power. Alas, I am a big fat liar and the chances of me being a millionaire this time next year are highly slim. Those advertisers wasted their money yet again.

So the idea of serving adverts according to sentiments expressed on social networking sites (New ad tool can read your mind AND predict the future, Revolution Magazine 12.08.09) is an interesting one, but I would advise advertisers to approach such technologies with caution.

While technology is likely to be able to pick out positive or negative keywords, it is unlikely that it would be able to accurately understand the context of a comment – such as the motivation or mindset of the consumer throughout different stages of the purchase journey.

As we all know. people are not always truthful on social networking sites, where anonymity and a lack of eye contact can be more intoxicating than several pints in the pub. This surely imposes limitations on the success rate of the technology in identifying the right potential customers.

Speaking from experience, I've been at the sharp end of this nascent technology. I have a Gmail account that insists on highlighting recipes for spam based meals on account of my lack of spam filter. 

The other factor is scalability. The success of any targeting technology requires huge scale to deliver meaningful impact and ROI. However smart or intuitive, there's little value in a targeting tool without significant volume of consumers to target, and I suspect this will be the biggest challenge to overcome. While I admire the thought process from which the development of this technology has come, will it provide benefits to advertisers? Probably, but not on any significant scale to be effective.