Are Consumers Following Retailers to Social Networks?

Article excerpt

ABSTRACT

This paper examines the use of social media marketing (SMM) by top retailers during the fall of 2009. Eighteen top-rated retailers and five social media networks were identified for this study. Data were collected weekly from September through the first week of January 2010 to determine the level of participation by the retailers on each of the social media networks. The number of "subscribers" to each retailer's social media platform(s) were tracked for the eighteen weeks reviewed. Significant changes were found across retailers, and across the different social media networks.

INTRODUCTION

The current economy poses many challenges for marketers and retailers. A Yankelovich Partners study (2005) found almost sixty percent of US customers find marketing to be irrelevant for them personally, and seventy percent are interested in products and services that would help block marketing attempts. Somewhat ironically, the same study also found that customers respond more favorably to marketing when they have control. Consumers are happier being a part of community, rather than the target of a marketing campaign (Cocheo, 2009). Consumers are more likely to buy something that is recommended to them, rather than when it is "marketed" to them; this is even more likely when the recommendation comes from someone that they trust.

Nielsen (2009) reported that global online video has grown 339% since 2003 and time spent viewing has increased almost 2000% In addition to the growth in the use of video, the number of online social media users has grown 87% since 2003, and the time spent on these sites has increased 883%. In the last year alone, (2008) time spent on social networking sites increased 73%. A large percentage (85%) of social media networking users want companies to interact with them using social media applications (Nail, 2009). A 2006 comScore Media Metrix report (Trusov, Bucklin, & Pauwels, 2009) indicated every second, online users in the US had visited at least one of the top fifteen social networking sites, and that approximately fifty social networking sites each had more than one million registered users. In 2007 Oser and Adepiju reported that 37 percent of the US adult internet population and 70 percent of teens used online social networking at least once per month. Predictions show that the total US social networking audience will grow to 105 million in 2011. According to Neilsen Online (2009) research, use of social networks and blogs is now the fourth most popular online category. Alex Burmaster, of Neilsen Online, stated "social networking is not just growing rapidly, it's evolving in terms of a broader audience, and compelling in functionality." One-third of Internet users report comments by consumers provided on the social media sites have been influential when they make a purchase decision, (Deatsch, 2009a), but just 11% considered advertising to be as effective. During the past year, almost half of Americans had consulted social media while shopping, and more than one-third, (37%), had done so in the past three months.

Based upon the usage rate and statistics, there is no question that retailers are quickly incorporating the use of social networking sites into their marketing communication strategy. The use of these sites became even more advantageous as many retailers implemented the benefits of the sites' applications during the holiday season in an effort to generate revenue during this struggling economy. Many have recognized that social networking is about linking people with common interests. Companies such as American Eagle, Gap, Ice.com, Victoria's Secret, Macy's and Nike have experimented and/or incorporated the use of social networking, (Reda, 2008). The challenge for companies is learning how to use social networks to the greatest benefit. Many retailers used such social networking sites as Facebook.com, discussed later, to utilize an application that the network labels "events". …