Retailers Invest In Social Networks Despite Limited ROI

Retailers are banking more on the qualitative advantages of a social media presence, versus a quantitative ROI, according to “The State Of Retailing Online 2011: Marketing, Social, and Mobile” report conducted by Forrester Research Inc. for “On average, retailers report that only a small single-digit percent of sales can be attributed to social media at this juncture,” the report stated. “Close to two-thirds (62% and 61%, respectively) of retailers surveyed also note that the ROI associated with social is unclear and that the primary ROI is around listening.”

Results from Facebook investments, for example, rank below investments in paid search, email and affiliate marketing. The most popular social network also does not retain customers or attract new customers, survey respondents noted. Only 6% said Facebook improves the lifetime value of existing customers and 1% use it for customer acquisition. Brand building (40%) and listening to customers (37%) currently are the top two benefits of Facebook spending, according to the report.


Nevertheless, retailers are increasing their social network investments. Approximately 72% of retailers surveyed said they will increase spending on social networks in 2011, although SEO/natural search (75%) remains the top area receiving an increase in marketing spend.

Both social and mobile strategies were analyzed in the study. “After spending the last few years learning how to capitalize on social media and new mobile technologies, one of retailers’ main focuses right now seems to be leveraging the tremendous popularity of tablet devices, such as the iPad,” said Head of Research Fiona Swerdlow. “As sales channels continue to blur in retail, companies are creating mobile apps that make their brands seem current, entertaining, or fun, while at the same time creating a unique opportunity to connect with more shoppers than ever before.”

“The data indicates that significant investments in social and mobile tactics will be in place this year,” added Sucharita Mulpuru, vice president, principal analyst, Forrester Research. “Retail executives should have modest expectations for the benefits of social commerce. With regard to mobile, retailers should be working to increasingly integrate features and functionality into the physical store experience. While consumers may not be extensively exploring product information yet, basic store information, transparent pricing, and easy checkout capabilities are likely to be the most pressing opportunities for most sites in the near term.”

Mobile Spend On The Rise
Although mobile marketing is increasing at a slower rate than social, 16% of retailers reported an increase in wireless/mobile marketing for 2011. This number may be under-represented, though, because 61% of retailers are increasing their investment in paid search, which also includes mobile.

The tablet industry is helping to push mobile investments up, with retailers reporting that 21% of all mobile traffic is coming from tablets, even though the iPad was launched just one year prior to the survey.

But tablets could be muddying the waters a bit for retailers that have been slow to optimize mobile sites for both smart phones and tablets. As many as 44% of retailers said their mobile sites offered “nothing special.”

“Challenges for retailers include differentiating the consumer experience on a tablet versus a smartphone and figuring out features and functionality in dueling app/mobile Web ecosystems,” the report noted.

Generally, retailers are only in the initial stages of a refined mobile strategy. Only 29% of retailers who have a strategy currently are working to refine it; and another 28% are just implementing a mobile strategy and/or starting to work on it.

The top goals for mobile are improving customer satisfaction (64%) and developing brand loyalty (64%). Just over 57% are hoping to improve customer acquisition with mobile and 55% are planning to improve customer retention.

“The State Of Retailing Online 2011: Marketing, Social, and Mobile,” is available to members and also can be purchased directly at Forrester clients will be able to access the report as part of their subscription service one month from publication., a division of the National Retail Federation, is the world’s leading membership community for digital retail. Founded in 1996,’s 600 members include the 10 largest retailers in the U.S. and more than 60% of the Internet Retailer Top 100 E-Retailers. The annual summit is taking place in Boston, September 12-14, 2011.

Forrester Research, Inc. is an independent research company that provides advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs.



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