Social Media’s Issue: Does It Drive Sales?

Tags: Burberry Chanel Dior facebook Gucci Instagram Louis Vuitton Pintrest twitter

Call it the Facebook backlash.

The company’s disappointing initial public offering has increased scrutiny throughout the social media space, including in the fashion world. Brands now are analyzing their social media efforts more than ever and asking a key question: What’s the return?

“The next 12 months are the make or break time for social media, but I do think the investments have been there. People have sizable communities and want to make them ROI [return on investment] positive. We will really see if the metrics prove one way or another,” said Maureen Mullen, New York University think tank Luxury Lab, or L2, director of research .

At this point, observers say, few brands, if any, are seeing significant sales result from their postings on Facebook, Twitter, Instagram, Pinterest and other sites. Social media hasn’t been about driving transactions; it has been about building brand awareness and a “community” that will be devoted to a brand and, thus, buy it. Social media isn’t about sales today; it’s about driving sales in five, 10 or 15 years as the Internet-mad generation of twentysomethings matures.

Every leading company with a good to great social media presence is on the requisite platforms: Facebook, Twitter, Pinterest, Instagram, Tumblr, YouTube with e-commerce, a blog and elaborate editorial content on their own digital flagships. Burberry, Christian Dior, Chanel, Gucci and Louis Vuitton all having fan bases on the platform that surpass 5 million. The more money brands pump in to their social media efforts, though, the greater the pressure for them to begin showing a return on the investment.

There’s only one problem: For now, there isn’t a universal metric to measure the ROI. That, coupled with Facebook’s IPO flop, is starting to give social media a bad rap, Mullen said.

She cited Burberry, which has more than 13 million Facebook “likes,” as an example of social media’s impact.

“The halo of innovation that they’ve gotten from investment in social media and all these platforms has almost become a pillar of their brand,” said Mullen. “If you look at Burberry 10 years ago, it meant British and plaid, [but] now it means British, plaid and innovation. Largely at the heart of that, in addition to great merchandise and creative, it’s been a real commitment to social media and technology that resonates with the younger consumer. On a one-to-one basis attributing fans to ROI, I don’t know if it’s there, but I think as a great affect on their business, it’s been there in spades.”

She does see that brands with strong social media communities drive significantly more traffic from Facebook and similar sites to their digital flagships. Again, she points to Burberry, noting that the 1.9 percent of traffic that came to from Facebook in 2010 exploded to 29 percent one year later. She expects that a fraction of this traffic is incremental and that the brand wouldn’t have gotten it otherwise — unless it paid Google — and this is exactly where the company begins to see the ROI.

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