A new report from KubasPrimedia suggests that marketers investing in social media to drive brand loyalty and sales are investing in the wrong area.
The Toronto consultancy’s new Major Market Retail Report (MMRR) is based on interviews with 1,520 consumers about their retail shopping habits and store preferences, and is considered statistically accurate to within plus or minus 2.5%.
The company – which has been conducting retail analysis for more than 15 years – examined shopping behaviour in 33 product categories at 147 retailers to determine so-called “competitive retail metrics,” including market coverage, shopping levels, drawing power, loyalty and retailer performance scores.
According to the MMRR, 77% of Canadians consumers “often” or “sometimes” visit retailer websites to obtain information about a specific product, while 71% visit manufacturer websites. Only 27% use social media to gather information, while 23% use blogs.
Ed Strapagiel, executive vice-president of KubasPrimedia, said the findings undercut the prevailing notion that social media tools – primarily Facebook and Twitter – are a crucial marketing element and underscore the importance of creating a robust website. In order to ensure a healthy return on investment, he said, retailers must focus their efforts on where customers are actually turning for their information.
“Social media is a loop, and things go back and forth,” he said. “Like anything online, if you don’t have a good end point [the web site] and are spending a lot of effort driving traffic to it, it sort of puts the cart before the horse.”
Strapagiel said social media activity might nudge online purchases, but doesn’t drive them. He cited a recent U.S. report from Forrester Research and GSI Commerce which found that less than 2% of online orders during the 2010 holiday shopping period were the result of shoppers arriving via social networks.
“There’s a lot of emphasis on social media [tools] and how good they are, but a lot of this in my view is coming from people who are vendors in this space,” said Strapagiel. “The thing that’s been absent is any kind of objective, hard number evidence of what this actually does [for brands].”
Strapagiel said marketing is evolving to the point where “a whole lot” of marketing channels will be considered supplementary, meaning that marketers must ensure they’ve invested in core assets like their website.
“There are so many different things you could be doing, and you really have to have your priorities straight to pull this off without spending a lot of time and money on the wrong thing,” he said.
The MMRR also found that 63% of consumers “often” or “sometimes” search for online coupons and promotions, and 45% use “daily deal” sites like Groupon.
Strapagiel urged retailers to “tread carefully” if pondering such services, however, noting that the majority of the advertisers are services like restaurants and spas that can afford to offer discounts of 50% or more. Yet, most goods retailers are unable to sustain such deep discounts because the business model is radically different, he said.
