"Where is the return on investment?" asks Context's Adam Simon

BLOG: How important is social media for ICT retailers?

Adam Simon, Global MD for Retail Business at analyst Context, asks how effective Facebook and Twitter really are for UK tech retailers.

There’s no doubt that most UK retailers and etailers are investing in increasing their base of social media followers.

A recent study by Context of the top 45 European ICT retailers and etailers shows that the UK leads Europe in terms of its fan base: UK retailers have 10 million Facebook likes and the closest country is Italy with 5.2 million likes. The UK leads also on Twitter with 0.9 million followers while the number two country is Spain with 0.3 million.

But where is the return on investment? A European Managing Director who has spent heavily on growing his presence on Facebook said to me recently: “I don’t want likes, I want buys!”

He added: “When I buy an advertising campaign on television I see a two per cent increase in market share but I see nothing so obvious from investing in Facebook."

A most frustrating response if you are the head of marketing trying to increase investment in social media.

The answer is: no-one really knows. There are many people who offer solutions, and Facebook itself says that it is on the verge developing effective tools for tracking marketing effectiveness. But spending on social media today is more an act of faith than a rational act of investment.

Nevertheless, you would be really foolish not to invest in social media. For example, the same retailer who complained about the lack of return on his Facebook investment has nearly a million likes on his page, marginally more than his nearest direct competitor, and way above the others.

As the highest proportion of likes comes from the 18 to 24 age group, it makes sense that they are liking more than they are buying. But in 10 years’ time when they have the disposable income, that investment will pay off.

Equally, I am not sure that when people complain they are using the tools which are available in order to target customers. For example, the ability to target people accurately is higher using social media as a recent Nielsen study demonstrated – 38 per cent accuracy without Facebook compared to 89 per cent with Facebook.

The empirical evidence shows that some retailers are just at ease with social media. If you compare Asda and Tesco, for example, Asda has 250,000 followers, marginally more than Tesco, but generated with far fewer tweets (at the time of the Context study, 6,500 compared to Tesco’s 550,000).

On Facebook they have a similar number of likes, but six times as many people were talking about Asda’s posts than Tesco. This should be worrying for any retailer that wants to get under the skin of their customers.

Argos and JLP top the YouTube charts with over 30 million views each, but these are driven by TV adverts which masks the good work done by companies like Maplin (which shows customers how to use products).

Lastly, this is for indies. At this year’s PCR Boot Camp, we talked about this, and I discovered some amazing Facebook sites where indies demonstrate their engagement with the local community and showcase satisfied customers and high standards of service.

Can you afford not to invest in social media?

About the author

Adam Simon is Global Managing Director for Retail Business at sales tracker Context.

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