Never mind Facebook's IPO flop. Social media will soon become a more dominant way for stores and brands to interact with consumers, says IBM research.
The face plant by the Facebook IPO was ugly, even by Wall Street standards.
The opening $38 issue price lasted only a couple of hours, as new revenue forecasts dampened demand for the social-media stock. Lawsuits quickly followed about how underwriter investment banks handled information and may have hurt investors.
It was the second hit within a week for Facebook. Prior to the IPO, General Motors said it would no longer spend $10 million a year to advertise on Facebook—though the automaker does reportedly have 8 million friends on Facebook and would continue its non-advertising presence. Granted, this decision was part of a massive marketing expense cutback by GM—but, says BloombergBusinessweek, it still made some people wonder about Fecebook’s business model.
The Lempert Report has written about how GM has recast Cadillac as a brand for younger consumers, using social media in the mix. The company appears sophisticated in its use of social media. If GM isn’t giving Facebook one red cent going forward, what should retailers and CPG brands think?
OK, that question may be apples and oranges—because the food category isn’t the car category. But industry players should still consider this as they refine strategies.
Other data suggest plenty of tailwinds in support of social media. A new IBM study of more than 1,700 global CEOs says that within three to five years social media will leap into the #2 spot as a customer-interaction method; it will follow face-to-face and be ahead of websites and other methods. The research showed that 48% of companies that outperform in revenue and growth promote organizational openness.
This parallels a panel discussion on corporate transparency and openness through social media that occurred at FMI 2012.
Social media “is almost the window into the soul of your brand,” Food Lion president Cathy Green Burns said. She called social media a way to connect with communities where the chain operates in a “very public…conversation about our brand.”
Concurring, Jerry Golub, president and CEO, Price Chopper, urged the audience to “open up your company to more transparency than ever before. If you don’t, it actually hurts more than it helps you,” according to the Supermarket News account.
According to J.K. Symancyk, COO at Meijer, social media is about listening to customers as much as it is about what a company wants to say, the SN account continued. “You quickly realize you are not as customer-focused as you think you are….It really is like starting a one-to-one relationship with, in our case, 600,000 customers” who are listed as the Facebook fans of the chain, he added. The panel was moderated by the Coca-Cola Retailing Research Council of North America, which has issued a series of reports on social media.
Meanwhile, Walmart has a research team of about 200 figuring out the best ways to align the retail giant’s stores with its social, web and mobile presence, reported Internet Retailer. It also has a smaller team to interact with consumers each day on social media. The research team includes Kosmix, which Walmart acquired in the spring of 2011.
Retailers and brands that aim to benefit most from social media should learn to communicate in ways that interest consumers most—and track topics and platforms that generate the most traffic, we urge at TLR.