New Study on the Convergence of Social Media and E-Commerce

ClickZ has an analysis of a new study released by market research firm Compete, which looks at the convergence of traditional e-commerce and social media. The report which coins the phrase "social commerce" or "s-commerce" for short, finds consumer visits to social networking sites such as MySpace, Facebook and YouTube, have increased 109% since January 2004 and page views per visitor have grown by 414% in the same time frame. So how can marketers obtain success in this new medium of social commerce?

According to Compete, marketers experiencing the most success are those that are using a combination of branded micro-sites, customer reviews, forums, peer-to-peer transactions, product blogs and user-generated content projects.

As for actually advertising on social sites, the report states that the return on investment isn’t going to be any better than traditional customer acquisition campaigns. In fact Stephen DiMarco, VP of marketing at Compete and author of the report states, "It’s stupid to just advertise on MySpace and assume you are a social marketer. The better thing to do is get your customers associated with your brand."

The means by which one accomplishes this has to be unique and clever because it can be difficult to grab the attention in the social space because the consumer is already fixed on so many other things. "Consumers have limited social bandwidth. People only want so many friends, so the bar is high for marketers to create that bond that social networks have. Already people are starting to become social-saturated. For marketers, there are not going to be as many opportunities as they think there are. So they need to be more creative," says DiMarco.

He goes on to say, "Companies would be better served to build online forums on their sites, micro sites that support their brand, or explore other ways to get consumers to participate with them versus going to social networks to find more consumers." We already see music artists and entertainment products such as television shows and movies using online social venues to draw consumers and build brand loyalty. It will be interesting to see what traditional e-commerce site will do to tap into this new medium.