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Social commerce is like a unicorn: beautiful, alluring, and almost totally imaginary

by John Koetsier on May 23, 2013

unicorn stabbingCall it the unicorn problem: beautiful, alluring, magical, and totally non-existent. Social commerce, according to the latest Monetate e-commerce report, is almost as elusive.

In fact, social media referrals represents just 1.55 percent of all traffic to major e-commerce destinations. And when that tiny trickle of traffic arrived, only .71 percent of it actually resulted in any kind of sale. Email marketing, by contrast, generates twice as much traffic as social media, and has four times the conversion rate to sales.

Those are not good numbers for social.

Conversion rates by traffic-referring sources
Source: Monetate

Conversion rates by traffic-referring sources

The darling of the omnipresent social media gurus on Twitter, social commerce was supposed to totally disrupt e-commerce. And, because people trust other people’s recommendations and spend a lot of time on Facebook where they meet other people and read what they say, social commerce was supposed to be huge, turning social media influence and shares into sales and revenue.

Unfortunately, there’s a problem:

“The challenge for social media — and for its big brother, word of mouth marketing — is that they are inherently additive pieces of the conversion funnel, rather than causative,” Monetate’s new report states.

But Monetate says that the problem isn’t in the social. It’s in how companies are using it.

Loyalty isn’t about clicking on an offer, report author Mitch Joel says, it’s about building a relationship. And a relationship goes far beyond “do you want to buy this.” Which means that social is not short term, social is not transactional, and social is not the same as direct response.

In other words: shocker, social media is, well, social.

Taken in that context, social can still be very valuable for brands, as marketing firm Syncapse found just a few weeks ago, valuing some Facebook fans at over $1,600. But it’s the relationship that’s valuable, not the episodic communications per se.

And that relationship can be very valuable. When an actual sale is made from a social referral, it’s often valuable, with the average Pinterest-referred sale clocking in at over $80, and the average Facebook and Twitter sales at about $70.

Average order value by social-referred sale
Source: Monetate

Average order value by social-referred sale

photo credit: zoomar via photopin cc

Filed under: Business, Enterprise, Social

    



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Beyond sexting: We should celebrate Snapchat and encourage ephemeral communication

by Tarun Wadhwa on May 22, 2013

ss-shocked-man-on-phone-snapchatTarun Wadhwa is a writer, researcher, and entrepreneur working at the intersection of technology and public policy.

You would think that it would be a terrible idea for a company accused of helping teenagers send each other sexually explicit images to feature bikini-clad young girls in their marketing. Most would avoid such direct associations, for good reason – it’s immature, and edgy when it doesn’t need to be.

But not the makers of the enormously popular app, Snapchat, which allows people to send images and videos that “self-destruct” after a few seconds.

The company claims messages are deleted once they are opened, but there have been a series of recent scandals showing that this may not be completely accurate.  Their product is far from perfect, and there are several ways to compromise the protection they offer.  It is never a good idea to send something over the internet that would damage you or your reputation if it became public.  While this may be common sense, it has little to do with how we actually act online.

The makers of Snapchat are right to reject the “sexting app” label — it’s not clear that this is what it is even being used for, and everyone deserves the option to communicate privately when they want, without automatically being branded as a pervert.

snapchatWithin a few months of launching, the company has made an enormous and lasting impact on the culture of communication on the Internet, and we should all be grateful.

They have simplified a security process enough to the point that anybody can use it, while validating the market of the next generation of privacy-preserving ephemeral communication.  Most importantly, we may finally get a break from the forced permanence of the Facebook and Google world, where everything you do and share is a data point to be monetized and re-sold to the highest bidder.

And Snapchat isn’t even the best product out there — there’s a whole slew of communication tools that are more secure and functional making their way into the public eye.

One of those is Wickr, created by RSA veteran Nico Sell, a more serious security-focused app that uses “military-grade” encryption to send text, video, voice, and document files that can self-destruct after a given period of time.  Hospitals and law enforcement have expressed interest in a similarly functioning Android app, Gryphn.  Although it’s not “self-destructing,” keep an eye on the exciting and powerful suite of communication apps developed by encryption legend Phil Zimmermann’s Silent Circle company – they are not for “average” users, but they could provide enterprise and more serious clients a massive improvement in security.

What apps like these do is allow us a little bit more freedom to be ourselves, for better or worse.

In the copycat world of Silicon Valley startups and funding, expect to see a lot more “Snapchat for _____” type companies.  Finally, the lack of app creativity may work in the favor of consumers.  We have accepted the notion that what you do on the internet is permanent – a statement that is partially a truthful observation, and partially a threatening promise from the companies and entrepreneurs who are making it a reality – but it doesn’t have to be that way for everything.

Perhaps the greatest impact of this rising industry will be when the giants try to co-opt them, as Facebook attempted with Poke.  The issue of trust in these companies aside, it would be a winning situation for everyone for ephemeral features to be built into the services we already use.

We need more human-behavior-friendly default settings.

Privacy is complicated, and nothing is ever completely secure.  Nobody is immune from this, as Nicholas Weaver wrote in Wired, “even the head of the CIA can’t email his mistress without being identified by the FBI.”  But in the billions of messages already sent through Snapchat are a few people who didn’t have their lives ruined because of something they shouldn’t have shared.

The media can continue to ridicule the “sexting app” that so many young people are using, but they are entirely missing the point.  The same generation being blamed for the supposed “death of privacy” has become wiser than those who are criticizing them.

In a candid admission at the Milken Conference this year, former UK Prime Minister Tony Blair, when recalling his college days playing in a band, told the audience, “thank God social media didn’t exist then, because if it did, I wouldn’t be here.”  The Internet wasn’t built with security in mind, and we’re still dealing with the consequences of that.  The next generations are going to be the ones who pay the true cost of the design decisions we make today.

Tarun Wadhwa is a writer, researcher, and entrepreneur working at the intersection of technology and public policy. You can follow him on Twitter – @twadhwa – or contact him directly at VB@tarunwadhwa.com. Also, check out his upcoming book, Identified, which will be out later this year. 

Image credit: Shutterstock/Shocked man

Filed under: Business, Lifestyle, Media, Mobile, Social

    



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