Social Media is UnSKUable

There is a dirty little secret that marketing industry insiders whisper about over beers and conference call lines: Social media barely drives direct ecommerce sales. It is something that puzzles and confuses us at a time where social dominates. But dig further and you will find that social media can sell, but the same old way of doing it doesn’t work.

Direct marketers earn their living and budgets because they can show how a paid media placement drives a conversion to sale within 24 to 48 hours after the impression or click is made. Unlike traditional brand marketers, who enjoy annual planning processes and quarterly campaign budgets, the “Direct Response” (DR) marketer is in the trenches moving money around daily.

Paid search and programmatic banners—powered by sophisticated bidding tools and conversion-tracking pixels—power this role by proving the cost/benefit. The DR marketer is often willing to try anything new—so long as it pays out every dollar spent within the first week of tests.

So Why Isn’t Social Selling?

But social media continues to perplex the DR marketing world. I’ve spoken with several search engine marketing companies and DR sellers that are perplexed by social. For the price of a beer to cry into, they will confide how grand hopes of social media expansion have been killed by anemic ROI. In the U.S., we spend 6 hours per day using social media, and 46% of people say their purchases are influenced by social media. But social drove only 1.8% of ecommerce sales during the 2015 holiday season.

How could this be? Do we just need more buy buttons on social posts? Nope. We’ve just been doing it wrong…

Our approach to new advertising platforms typically begins with a reapplication of the current historic models. The first TV ads featured radio-style announcers reading into the camera. The first banner ads were very much like print or outdoor creative. And social media continues to be thought of more like Search, in which a click to buy is expected to happen.

But we fail to adjust to the new medium and how consumers use it. While Search is a heads-down hunt, people use social as a lean-back, entertainment experience. Ironically, we should actually think of social more as an evolved form of TV or Print ads. We must lure their attention to something different, and place our ads based on relevance, interest and intent—just like placing makeup ads in a beauty magazine or kitchen appliance ads on HGTV.

Of course social allows us to personally target at a breakthrough level, and the new creative options can be incredibly engaging, entertaining and informative. In our experience as a social and content technology company that works with some of the biggest brands in the world, we have seen first-hand how a new approach to social can clearly drive sales at scale. Even generating that elusive click-to-buy.

It takes a fresh approach to seeing this success on social. And there are two initial steps that performance-focused marketers should start with on the journey:

Spark Ideas that Inspire Action
People use social in a way that is fundamentally different than a search engine or product catalog. Don’t believe me? Try posting your top selling product SKU on a white background and watch as almost no one clicks through. Post an incredible digital coupon or offer code and you’ll hear the same digital crickets.

To succeed on social you have to swim with the current of the platforms. The light, lean-back nature of social means you have to deploy creative that actually adds value to this consumer experience.

In case you haven’t noticed, Facebook, Instagram and Pinterest are being overrun with food content in recent months. That’s because we all decide what to eat at least three times a day and we enjoy variety. The social platforms have tweaked their algorithms to highlight food content because we enjoy it.

Smart marketers like Kraft (an Ahalogy client) are not using this “insight” to promote $0.50 off spaghetti sauce. Instead, they are posting relevant, timely, and oftentimes personalized recipes that meet this demand in a way that feels natural and authentic. A click to get the full recipe gives Kraft a chance to feature its products and even share promotional offers to help close the deal. Engaging ideas lead to sales.

Few companies, including our clients, want to give away the secret sauce of their results with this content marketing approach. However one piece of evidence comes from a group of Pinterest panel studies which proves that this kind of marketing approach drives 5x more in-store sales than the Oracle industry average for digital media.

For ecommerce businesses that sell individual products, one of the best tricks we’ve used is to organize SKUs into bigger ideas and collections. Again, you’ve got to think in terms of ideas and inspiration instead of pure product. Polyvore has been the leading company to package products into content in this way by allowing people to create, discover—and then buy—complete outfits.

We recently brought this approach to a new retail client, and it is already generating over $5 in ecommerce sales for every $1 spent in paid media—and that’s before what they expect will be a further boost to in-store sales.

Look Broader For Proof of Purchase

All too often we see direct response and ecommerce marketers limit their view of sales evidence to the last click, which must occur a day or two after the media is served. But they can be missing significant sales hiding in plain sight.

We recently worked with a home furnishings company on a 3-month Pinterest paid media campaign to promote its new lineup. By the end of the campaign, our clients were disappointed to find that sales were not matching what they usually saw in Search marketing.

But a funny thing happened when we updated them 4 weeks later—a huge burst in sales from the promoted products after the campaign was completed, and what was now a very positive ROI. Sales from those promoted pins continued over the “dark” months to come. No wonder Pinterest is a top investment priority for the company today.

When you are creating and promoting content that helps people plan a future purchase, it takes a different model to measure results. In this case, furniture buyers need time to plan a room and like to consider the options over weeks or months. The paid media campaign led to a lot of re-pins that buyers went back to later when they got to a decision. This is happening on Instagram, too, where research from the platform shows that only 21% product purchases happened within the first 24 hours of engaging with product posts.

In addition to looking at longer payout periods, we’ve got to make sure we are measuring the lift that happens in-store. Clicks-and-mortar stores too often separate their retail and e-tail spend and measurement, but new tools from hot startups and huge players like Visa are finally tying the two together for one complete view of ROI.

Simply put, social sells—but it takes a different approach in creative and measurement. If you and your organization don’t make the changes needed to get there, someone else in your category most definitely will.

If you would like to learn more about how we’re helping retailers sell on social, please request a meeting and my team and I will set up some time to chat.

Pinterest Upgrades for Holiday Sales Push

In our company’s work as a Pinterest Marketing Developer Partner, we’ve known for a while that people use the platform to plan far in advance. For example, back-to-school prep begins not long after summer recess, and Halloween starts peaking in mid-August. Holding to form, Pinterest itself just announced a set of features to help retail brands just in time for them to finalize their marketing plans for the holiday season. It’s another example of how the Pinterest team’s focus on commerce drives unique sales opportunities.

Data proves the purchase-driving power of Pinterest

While Facebook, Google and Snapchat vie for video ad sales and live broadcasting of events, Pinterest has quietly continued to innovate its product and advertising products toward moving consumers down the purchase funnel and into a transaction. New data from the annual Mary Meeker KPCB Internet Trends Report suggests that Pinterest is the social platform for shopping. As shown in the graphic below, 55% of people say they use Pinterest to shop, with the next highest being Facebook at 12%.

Other data continues to reinforce this story. A Millard-Brown study last year reported that 93% of pinners use it to plan purchases, and 87% have purchased a product after discovering it on Pinterest. Our own Ahalogy study last year showed that 64% of Pinterest users look up items they have pinned while at a brick and mortar store, up from 30% in 2014.

On the CPG brand side, the company announced a partnership with Oracle to measure in-store sales resulting from Pinterest campaigns. While specific brand results are a closely-held secret, the company shared that the combined results of several studies prove that Promoted Pins drive 5 times more in-store sales compared with the industry average.

New shopping features to drive sales

No matter how big Facebook and Google are, or hot Snapchat is, it’s impossible for them to fight a war on all fronts—and Pinterest’s focus on discovery and shopping is allowing it to win. Witness the release of several exciting new features in its app, announced last week:

  • Shopping bag: Allows people to save products they have discovered and pinned over time, making it easier to go back to specific products you’ve had your eye on
  • Merchant profiles: Gives retailers a richer way to showcase their products, including new releases and items on sale
  • Visual search: Potentially the slickest feature now running in a social app, this enhances a pin photo to display related products and items. Coming soon, Pinners will be able to visually search the entire world through Pinterest.

In addition to these new features, Pinterest continues to ramp up the number of retailers using its Buyable Pins.

Promoted Pin media innovation continues

One of the knocks on Pinterest early on was that its ad product, Promoted Pins, lacked some of the bells and whistles offered by Facebook and Google. However that gap has narrowed significantly thanks to the launch of other much-requested features that media buyers should love:

  • Customer list targeting: Allows brands to serve Promoted Pins based on people who are in their databases—or exclude them in a campaign aimed at new customers
  • Visitor retargeting: Reaches people who have expressed interest on your website or app, which drives a 3x improvement in click-through rate (CTR), according to Pinterest.
  • Lookalike targeting: Serves Promoted Pins to people who look similar to your best customers, driving a 10x to 30x increase in reach, and a 40% to 60% improvement in CTR

Only Pinterest media keeps selling after the campaign ends

Our company has had a chance to lead Promoted Pins campaigns since the beta launch two years ago. In that time, we’ve noticed something very interesting and unusual: Sales continue to happen months after a media campaign is complete. In one recent example, a client of ours ran a three-month Promoted Pins test at the end of 2015, and has seen a 3x ROI in the seven months since the start of the campaign. Amazingly, most of these sales came in the first month after the media ended, and sales continue to come in today from these pins.

What’s happening here? Well, it’s an example of how Pinterest and its media product are different and superior to anything else in the social marketing world. Pinterest enables people to save ideas, inspiration and products for future use and consideration. This makes Pinterest a kind of universal shopping list; and since many purchases are considered over weeks or months, the sales results from Pinterest can come much later than the original interaction.

Every other display ad, TV commercial or promoted post lives only as long as it’s paid to appear in front of someone. But Pins last organically, forever, on people’s boards and continually get recycled on an earned basis every time they are re-pinned, or when they appear as a result of a search query. And when you promote your best Pins with paid media, you’ll observe a big discovery boost in the short and long term.

While exciting, this added benefit of Pinterest could be hard for brands and media buyers to wrap their heads around. We have been trained to only look for purchases within the first one or two days after a click. Smart marketers are adjusting to track long-term results, which might make Pinterest the most efficient spend on the plan.

Marketers who are good at watching for new opportunities and adjusting ahead of competition tend to be the ones with leading brands and winning careers. Maybe it’s time for you and your team to engage further with Pinterest—just in time for the holiday shopping surge.

Why E-Commerce Is Poised to Transform CPG Marketing

A few weeks ago, an old friend who has spent his career in the consumer packaged goods (CPG) industry told me that he was preparing to move his family out to Seattle to help his company win with Amazon. I had a sudden flashback to the mid-‘90s, when several of my friends got shipped out to Bentonville, Arkansas, to help their companies win with Walmart. It’s a sign that we may once again be on the verge of a transformation in how the products we buy and use everyday are marketed and sold.

Walmart history lesson

By now most of us who work in this industry know the Walmart story: A determined entrepreneur re-wrote the rules of retail with a relentless focus on reducing costs. He passed the savings on to shoppers in the form of everyday low prices. Walmart invested in new distribution centers and tapped into big data to drive better logistics and decision-making long before this was an industry buzzword.

As Walmart gained volume share with the brands it stocked, the company began working more closely with sales and marketing teams in its suppliers’ headquarters. Walmart shared best practices on pricing, SKU assortment, and cost reduction. It even pointed R&D teams to underserved market needs. Eventually these suppliers saw so much current and potential business from Walmart, they moved scores of people down to “Vendorville” where they could work closely together on win-win opportunities.

Over time, Walmart’s retail competitors adopted this approach—or they quietly closed down. The impact on our society has been massive. There are positive stories, such as a McKinsey study that shows Walmart and its followers more than tripled retail productivity growth in the late ‘90s—with most of the benefits flowing to consumers. And there are the negative stories of shuttered local shops and manufacturing job migration to Asia. But either way, Walmart’s strategy significantly transformed commerce and society.

Ready for takeoff

According to Advertising Age and data analytics firm 1010data, CPG e-commerce sales grew 42% in 2015. Laundry detergent alone was up 85% and toothpaste up 75%. E-commerce accounts for only about 2% of total grocery sales according to Morgan Stanley, but it will grow quickly. After all, 26% of U.S. consumers say they will try grocery shopping online this year, versus 8% who said the same last year.

To paraphrase William GibsonThe future is here, it’s just waiting for a business model. While previous attempts to crack the code on CPG e-commerce have come and gone, a combination of both technology and business model innovation has unlocked the potential. The technology transformation stems from the rise of smartphones and software that make it simple to browse, purchase, and pay—whenever and wherever.

The new business models to support CPG e-commerce are multiplying and being adopted quickly. Amazon Prime has made online orders pain and guilt-free (well, except for all of that cardboard), and the company’s “Subscribe & Save” product is responsible for 20% of e-commerce last year, according to 1010data. Kroger, a client of ours, is building excitement around a service called ClickList that allows customers to order online and pick up groceries on the way home. And don’t forget startup models such as Dollar Shave Club, which are spawning copycats in many categories.

As these companies join the land rush to defend core businesses while capturing rare growth, consumers continue establishing new habits and locking in product and store preferences. Retailers’ marketing and innovation investments will drive further market awareness and excitement.

The interesting thing is that once people get used to buying online, they tend to want to do so more often. At some point, it becomes easier for us to shop for anything online, and that time spent traveling to and from a physical store feels like a painful waste of time. We’ll reach a tipping point soon when e-commerce becomes the default for any purchase. CPG products are primed to be the next dominoes to fall.

CPG marketing sea change

Shifting shopper habits aside, CPG marketers could see a powerful business-building impact from e-commerce for three key reasons:

  1. Market share: Leading brands tend to have higher market share online compared to physical stores. As 1010data reports, Tide detergent has a 48% share online, versus 38% offline, and even a smaller brand like Seventh Generation scores a 5.7% online, versus 0.6% offline. Brands with strong positioning tend to win online because they are less likely to get beaten out by the private label and value brands that distract shoppers at the physical shelf. Instead, e-commerce shoppers seem more likely to pick a brand and keep it on their shopping or subscription lists. Niche brands get a boost because the virtual shelf is limitless.
  2. Instant refills: The convenience of e-commerce allows CPG companies to capture the “dark volume” that otherwise goes unsold when people run out of the product. When supplies are low, we take an extra squeeze from the toothpaste tube, run the razor blade over our faces one last time, or have spaghetti night without the grated Parmesan cheese. But with more sophisticated subscriptions and home delivery, all brands can grow their business. 1010data says that e-commerce increased all-category CPG volume by 1% last year. That’s amazing growth for these stable categories.
  3. Smarter spending: I am most excited by the potential for CPG e-commerce to transform how hundreds of billions of marketing dollars are spent. To date, CPG brands have only partially benefitted from the rise of digital marketing. Their challenge has been a lack of data that shows how spending on one more channel directly impacts each in-store purchase.

Sure, you’ll see various marketing mix models and periodic household panel studies. But unlike their e-commerce brethren, CPGs cannot see whether or not a specific Facebook post, YouTube video, or Google AdWords placement directly drove sales. Once we have a critical mass of e-commerce purchases—and retailers who allow their vendors to access and aggregate this data—it will unlock a massive migration of ad budgets to activities that are proven to work, thus driving further growth.

Companies in the CPG space pride themselves on understanding their consumers’ evolving needs and giving them new products that better meet these needs. Now is the time for these same companies to dig deep into how their consumers’ shopping habits are changing, and invest ahead of the volume curve with current and new e-commerce retailers. The future of the industry is yours for the taking!

This article originally appeared on LinkedIn Pulse.

Hispanic Consumers & Content: Browsing & Buying Habits

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