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Econsultancy's Digital Cream Event LondonLast week some of us from Econsultancy US had the pleasure of traveling to London for the Digital Cream event (the equivalent of September's Peer Summit in New York). The day included a short talk on hot topics from the US perspective. In Part One, we looked at social media in general. This post finishes up with social commerce and email.

The most important phenomenon in social commerce is simply that the way in which we buy has fundamentally changed. Today, most of us use reviews, ratings and social comparison sites for all but the most trivial purchases.  From here on in, this new reality will may be expressed through different technologies, buying methods and platforms, but it’s here to stay.

Facebook has the third largest population on the planet, yet its economy is on par with American Samoa. That may change as the use of Facebook's payment scheme rolls out.  FB has achieved critical mass and regular connection to its users. If there are compelling products (even virtual goods are a lively 5 billion dollar business worldwide) and a minimally demanding interface, we could see a vibrant marketplace develop. It’s also a potential for a de facto 'digital wallet' to emerge for the first time, allowing for small payments to be doled out. Of course, it's just as likely that the Facebook credit stagnates, but even a modest success would mean significant revenue simply due to scale. A Facebook economy would also be a clear way for marketers to see and measure ROI - a respite from the industry's collective struggle to define the value of engagement.

Another interesting question is whether someone will make a group buying mechanism that goes to the next level. The idea is immensely powerful; people come together and use their numbers to negotiate a better price. It’s worked pretty well for Tesco and WalMart. The issues are in the execution, because it's not easy to get a critical mass of people together, and it's harder to get them to agree on something. So far the companies taking advantage have circumvented this problem by providing a limited number of products to their constituencies, and focusing on offers that don't cause problems with size, color and returns. But to be a real marketplace a smart system will have to take things like warranties, returns, charge backs and fraud into account, not to mention group member’s personal preferences. Most importantly, it will have to make it possible for consumers to find and coalesce around products and services they want.

One of the most intriguing areas of innovation in the last several years has been around predictive engines that use social connections to target advertising. If early studies are accurate, people with a social affinity (loosely defined by their interest in similar content rather than their literal social network connectedness) are 3-5 times more likely to respond to offers than a control, which compares quite well with contextual and behavioral modeling. It's also a favorite of privacy advocates since it doesn't require anything more personally identifiable than a tracking cookie. These same technologies may have broad applications in online commerce, including a new level of refinement to the affinity engines that suggest products and services to shoppers.

Finally, where’s the next generation of ecommerce headed? Certainly sites are getting smarter and easier to use (for example, I’m a big fan of perpetual shopping carts) but where are the big changes? In many respects, our shopping experiences haven't evolved much since the advent of the Internet. It’s rare that ecommerce is significantly localized by geography, even by retailers with stores in most locales.  On the other side of the equation, in-store shopping has a ways to go to incorporate mobile and RFID technologies that have the potential to eliminate checkout lines and simplify loyalty and coupon redemption programs.

In an era where customer service and engagement will be topics of endless discussion, it may be that the next big thing is simply listening; retailers being inspired by and responding to their customers in the social arena.

Email Marketing

Any talk on email these days has to deal with its assumed decline and fall, so the theme of this five minute talk was "What's not killing email this year?"
One trend that concerns US marketers is the fact young people don’t use email as much as their parents; for those under 21, email is a repository for confirmations, ecommerce receipts, and account notifications instead of their primary communication channel.  It’s a reasonable concern, but not one that’s likely to be borne out since most research suggests that media patterns adjust over time based on external factors like getting a credit card, job and the other trappings of being over 21.

In fact, kids aren’t the only ones migrating. Approximately 25% of American adults report that their use of email for interpersonal communication has been greatly diminished by their use of social networks. For the time being, though, that shouldn’t affect marketers negatively. It might even have a benign effect on click and open rates. Consumers and business people unequivocally prefer email as the medium for commerce related communication.  Email clients like Hotmail and Gmail are large, searchable databases that are available anywhere. They’re private, easy to use and secure. Finally, we tend to keep email addresses for a long time. Ask a Facebook member whether they’re still maintaining their MySpace page and if they’ve still got the same email address they had 10 years ago. 

Deliverability has actually become fairly exciting in the last year. Those of you who follow the medium know that the way in which email is filtered has undergone a rapid evolution…from content to reputation to engagement…that means that the likelihood of your emails getting delivered is becoming a function of how good your marketing is. If people open and click, your email gets delivered…if they don't, it doesn't…much like the Google model for featuring results in natural listings. This is exciting because it’s a positive feedback loop that rewards treating customers well and punishes over-mailing and irrelevance.

Finally, the hot topic, of course, is social media and its relationship with email. The Gartner report (here's that link again) last week got a lot of attention, and our own Chris Lake had an excellent response  that suggests social media and email are in a symbiotic relationship.  It’s probably going to be a relationship that simultaneously breathes new life into email and diminishes it in some respects.

Using social data to personalize and target email will be a powerful evolution in the medium, and email will continue to be our preferred channel for many types of communication (like notices from our social networks). But it's also true that our use of email for keeping in touch with people is waning, and that may have long-term consequences for email marketing.

Stefan Tornquist

Published 12 March, 2010 by Stefan Tornquist @ Econsultancy

Stefan is Vice President of Research (US) for Econsultancy. You can connect with him via LinkedIn.

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Comments (2)

Peter Duffy

Peter Duffy, Business Development Director at e-Dialog

Yes – this chimes with the findings of our consumer behaviour surveys here at e-Dialog.

Despite their popularity and ubiquity, only 2 per cent of 18 to 24 year olds prefer to be contacted about new products via social networks. This compares with 66 per cent who prefer to be contacted via e-mail.

 Email marketing is by far the most  effective method of communication, with 62 per cent of 18 to 24 year olds saying they are more likely to make a purchase online after receiving a promotional e-mail compared with only 24 per cent if the communication was made via a social networking site.

It seems that whilst social networks have the potential for highly targeted communication due to the depth of consumer data that is freely given by their users, the emphasis is very much on the social functionality rather than the commercial opportunities.

over 6 years ago


ecommerce software

Social commerce helps you to gain leverage from these conversations – and use the benefits of social networks and social media to improve your bottom line. And the area of social commerce has been expanded to include the range of social media tools and content used in the context of e-commerce.

over 6 years ago

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