Companies Must Capitalize More On Social, Mobile To Drive Revs

Initial indications that mobile e-commerce is driving holiday spending growth should be a wake-up call not only to retailers and traditional media, but to social networks and other new media players that consider themselves edgy.

Few companies are positioned to mine the accelerated pace of mobile, social transactions that defy consumer privacy concerns and a persistently lagging economy. The latest statics from the e-shopping front point to the growing dysfunction between marketplace and most media, marketing and retail companies.

comScore Chairman Gian Fulgoni contends e-commerce growth this holiday season is largely due to consumers’ attempts to save by searching for the best deals online. E-commerce is clearly taking share from brick-and-mortar retailers, growing at an average quarterly rate of 13% from a year ago compared with 7% retail growth.

Holiday spending will increase 15% to $37.6 billion. Cyber Monday spending grew 22% from a year ago to $1.25 billion -- its highest growth since 2006. The number of shoppers grew 11%, underscoring increased shopper awareness and more aggressive offers from retailers.  

Even as e-commerce sales grow more than 12% this year and more retailers enter the arena, too few companies are engaging the consumers in enterprising ways that capitalize on mobile, social vehicles. Few in the e-commerce space are attempting to improve their understanding and use of interactive technology to improve sales.

Wal-Mart, which recently launched a Labs division to improve its social and mobile offerings, recognized that pivotal point, underscored by timely statistics in Barclay Capital’s new Internet & Media 101 report.

Social networks collectively attract nearly as many unique visitors as the entire Internet, although they spend less than one-fourth as much time. Nascent domestic social network advertising will more than double to $6.6 billion by 2015, but only accounts for 24% of display and 9% of total online ad spending, which grew at 15% to $26 billion in 2010.

The domestic mobile advertising market will grow 65% to $1.3 billion this year and is expected to more than double in the next three years to $4.4 billion, with search and rich media leading the way, according to Barclay’s.

While such gains appear modest in the bigger scheme of things, energetic trending is clearly set; I’m willing to bet certain forecasts will be bested by 2015. I predict that convenience and universal mobile adoption will vault e-commerce to a greater penetration of retail sales than the 11% by 2015 forecasted by Barclays.

I also believe that advertiser and marketer online spending will exceed 21% of total U.S. ad spending by 2013 and begin creeping much closer to television’s slightly rising 36% of total revenues. The unexpected gains will come from local and national retailers realizing the cost-effectiveness, expediency and overall value of online marketing, appreciated ever more in a persistently tepid economy.  Local ad spending, which comprises 36% of overall U.S. advertising revenues, is a particular wild card.

Consumers have doubled their media consumption on the Internet over five years to 36%, essentially tying consumption of television, which still commands the lion’s share of advertising – which is TVs to lose.

That said, there are more opportunities than challenges that media and retail companies should pursue in 2012 in response to major developments that will morph interactive economics on all fronts. Here are three:

LinkedIn plans to leverage its 640 million choice professional members globally and more aggressively across the marketing spectrum utilizing its version of the “share” button. Executed properly, it could be a bonanza of marketing and advertising revenues different from dollars spent elsewhere in social, mobile and online.

Because LinkedIn users are more likely to be using smartphones and other sophisticated mobile devices for work, they are more likely to generate more e-commerce and interactive marketing sales. Pivotal Research’s Brian Wieser contends that growth in digital (increasing at about 10%) and television (growing at around 5%), growing at the expense of print and other traditional, lagging media, will reinforce the “have and have-not” economy that LinkedIn can use to its advantage.

Google
is aggressively leveraging its online search and advertising dominance to compete more squarely with Amazon by offering one-day shipping to select retailers, such as Macy’s and The Gap when consumers buy their products as the result of Google searches. While perplexing to some, Google’s moves aim high at the mobile e-commerce market in which apps are also likely to play a more prominent role.

The “sustained rise of e-commerce-based endemic marketers and large brands allocating budgets for engagement-based objectives in digital media” are ardently fueling spending shifts, Wieser says.

*Facebook is clearly determined to leverage its 800 million global users and 9 million business customers (more than 2 million of whom pay for ads or sponsored stories) to make itself a more serious contender for online, mobile and social ad spending. Speculation about a Facebook branded smartphone, as well as a Facebook app, aids its IPO plans and could secure an estimated $90 billion-plus market cap.

So much of Facebook’s future fortunes depend upon its ability to more aggressively and successfully leverage its user base and potent friend connections to generate real revenue. Already, Facebook appears to be capturing “the bulk of the growth in online advertising outside of [what] has been driven by exchanges and demand-side platforms for remnant inventory,” Wieser notes.





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1 comment about "Companies Must Capitalize More On Social, Mobile To Drive Revs".
  1. Donald Nelson from Donald Lewin Nelson , December 6, 2011 at 1:45 p.m.
    One of the great opportunities being missed by companies is increased sales through online product demonstations using a combination of Facebook and YouTube. When I was searching for a new High Definition event camcorder, I turned to YouTube looking for one which would meet my needs. These camcorder sell for around $3,000. Most of the videos were sales pitches hyping the product without providing adequate information. Panasonic, Sony, and Canon needed to provide better videos demonstrating the features and utility of their camcorders and accessories. The same can be said for other products. The companies need to learn to market their products. They need to learn that the people who are researching stuff online are close to a buying decision. They have the want or the need, and they are trying to figure out which product best suits their needs.