All about ... The future of social commerce

Paul Armstrong examines how this emerging territory will evolve.

Pinterest: 'can swoop in to make a play for brands’ cash and attention’
Pinterest: 'can swoop in to make a play for brands’ cash and attention’

You're unlikely to find anyone who would dispute that this year has been a rough one for the big blue whale, but whatever mud is slung at Facebook, the numbers speak for themselves - people are there and they talk about (and talk to) brands. They aren't, however, buying what many are selling ... yet. Although the recent roll-out of Facebook Gifts with its 100-plus partners is a nod that Facebook is making the right moves.

Looking at the "history" of social commerce, brand approaches tend to fall into two buckets - myopic or irresolute. We've seen single cans of soup being flogged through to shopping sites replicating their entire websites on their Facebook page - neither works particularly well and, without a clear strategy, efforts fall flat of expectations and are quickly abandoned. Couple this with general Facebook usage shifting to mobile devices and no business reason for Facebook to ever increase a user's organic opportunity to see brand content, and you quickly have a future that is paved in glorious, amplifying paid media.

The future of social commerce is up for grabs - Facebook does not own this space and emerging platforms such as Pinterest can effectively leverage Facebook's scale to grow their user base quickly and swoop in to make a serious play for brands' cash and attention.

Facebook is first and foremost a platform for people. Individuals share information with those close to them at an increasingly alarming rate. It's a brand's ability to exploit these signals to provide real value back to the consumer, wherever they want to buy, to encourage new shoppers, increase existing basket sizes and get talked about that will separate the men from the boys.

Working with "The Hive" (Mindshare's co-creation community of 300 digital natives) to understand what consumers want from social commerce, we have developed our views on how this territory will evolve. There are four reasons why we believe that the future of social commerce will primarily take place outside of social networks.

1. Transactions on Facebook itself are unlikely to become a huge opportunity. The consumer experience of shopping in Facebook Stores has been underwhelming. There has been no clear consumer benefit to shopping in an environment that offers a weaker experience than shopping on the e-commerce equivalent. Concerns about the security of financial details on Facebook are also surprisingly high given the plethora of personal information users are happy to share on it. There is also a worry that introducing a stronger shopping element will erode its core socialising purpose.

2. Integrating the social graph across platforms is a much more scalable opportunity than F-commerce. Facebook Connect and the Open Graph have brought social data to retailers across the web. The challenge, though, has been one of fragmentation - too many products and not enough friends make seeing a friend's recommendation on any one product pretty rare. Increasingly subtle social signals (wants, haves, needs, as well as likes) and more sophisticated analysis will help get round this. We'll move to a world where retailers present customised offerings based on our social graph, rather than relying on the serendipity of a friend "liking" the same product we're looking at.

3. Social commerce will come to the high street, but slowly.

Mobile makes the integration of the social graph with high-street shopping a reality. Although, for this to work, there needs to be a clear consumer benefit, or "social utility". This could be using social to solve a problem (is this product any good?) or meeting a social need when shopping (I'll look pretty cool if I share that with my friends). But this is a bigger behavioural change for shoppers than social shopping online and there are more technical data integration challenges, so it'll be a slower journey.

4. The interest graph presents the real opportunity for social commerce. Social data has limitations in helping us understand what someone's likely to buy. The interest graph (connections based on shared interests or passions) generates clearer "buy signals" to help retailers customise offers. Interpreting a customer's interest graph, and tailoring the shopping experience accordingly, will be the new frontier of social commerce.

Paul Armstrong is the head of social media at Mindshare. Tweet @mindshare_uk if you would like a copy of any of the Future of ... research series



- It's time to change focus from retention (existing customers) to acquisition (new customers) using offer-driven and interest-graph-based strategies.

- It's all about you - and them...

Create "social referral programmes" where the customer becomes your affiliate and can be used to acquire new customers.

- Use social to push mechanics further...

Scarcity and exclusivity drive timed sales and hype in a social environment. Enable your fans to create the desire and earned media - get them to recruit others.

- Create "shoppable earned media"...

Leverage the social curation trend to drive sales by giving people the tools to buy direct from earned media.

- Actual + digital = win...

Utilise interest graph data with actual customer data to create "lookalike" audiences, based on actual interests, who have a high likelihood to convert to sale. By analysing the trail of interest-graph data from existing customers, it is possible to target other users who display similar interests using paid media.

Digital Media Owners

- Assign spend to fully optimising your owned assets...

Integrating social plug-ins and action buttons into your online and offline activity isn't cheap for some because of website complexity. Done correctly, it can be efficient and give rich benefits, but it does cost time and money.

- Value, value, value!...

So you are optimised, now what value are you going to add? C&A's "Like" coat-hangers campaign, where Facebook users could like a product online and the amount of likes a product received was shown on an electronic coat hanger holding the same product in-store, gave instant social proof to shoppers - not only reducing the potential of a poor purchase choice but also validating the choice being made. Is what you are using the data for going to help people? Does it do it to a significant enough level?