Social Buying and CPGs

In the spring of 2011, Shopper Marketing took notice as General Mills became the first major consumer packaged goods company to run an offer through Groupon. A couple of months later, Supervalu became the first national grocery retailer to test a vendor-funded offer for loyalty cardholders (with Unilever) through the collective purchasing website.Later that year, Facebook executive Carolyn Everson, in an exclusive interview with Shopper Marketing and then speaking at the Shopper Marketing Expo, talked about how shopping is inherently social, which creates "a great opportunity for both retailers and CPG companies." Everson spoke of the "social graph" that Facebook has built, connecting people, places and brands.It was easy to assume that we were just scratching the surface – that a "social buying" trend was to follow. But two years later, the question remains whether CPG marketers can effectively use social websites to spur visits to the store. If nothing else, the relationship has been awkward."So far, CPG use of social networks for shopping and buying have been disappointing – too much couponing to Facebook and requests to 'Like' pages in low-engagement categories," says Nick Jones, executive vice president, retail practice lead, at Arc Worldwide, a Leo Burnett subsidiary. "Smart brands will work out what the underlying shopping need is – validation, information, inspiration – and use social media to answer that need."In an effort to understand the relationship between CPGs and social buying, we asked multiple sources how they define "social buying." Most of the answers referred in some way to recommendations and opinions from social media friends or online reviews. One source suggested that "social shopping" is the more interesting and more relevant term in the CPG world, and that "social buying" is limited to crowd-source platforms such as Groupon and LivingSocial."Social buying to me would be specifically buying a product on a social site," says Meg Way-Edgin, director, digital strategy and planning, Kimberly-Clark. "And that's something we do very sparingly – and not for the purpose of getting sales, but more for making somebody feel like they're getting an exclusive offer, or for helping get more engagement with our pages."There have been a substantial number of CPG deals on Groupon and LivingSocial, but mainly for online purchase. And retailers typically only dangle offers such as double the value of the purchase regardless of what's bought, not promoting any particular brand on its shelves. "It's an interesting model, just because you better make sure that financially it makes sense for both sides," Groupon director of communication Julie Mossler says of CPG-focused offers. "There's not a lot of margin to work with. There's a lot of coordination required.""The Groupon and LivingSocial model is not feasible unless it's for bulk," Way-Edgin says. "The margins are too low. It doesn't pay out."Plenty of Room to GrowThat's not to say CPG and social buying sites can't be friends; CatapultRPM helped Kellogg Co. with its "Share Your Breakfast" program during National Breakfast Week in March 2012. When consumers either commented and shared what they had for breakfast on various social media sites or bought a "families" deal through LivingSocial, Kellogg donated the cost of a breakfast to the nonprofit Action for Healthy Kids. Still, the initiative was more image enhancement than purchase.Jennifer Romano, director of digital shopper marketing at CatapultRPM, says price and availability are not barriers to purchase for CPG companies, and those are two hurdles that sites like LivingSocial help most with. Romano believes online reviews (e.g., Amazon.com) are the most powerful of the social path-to-purchase tools. And she recommends practices that stretch the definition of social shopping tools, such as email marketing and online coupons. "They're so important because you know they work," she says. "Sometimes it's not always the newest and the shiniest. If you're a CPG and you're looking where to put your digital dollars, personally I'd recommend a mix, that you do what you know works and keep a bucket of money for test and learn. Mobile coupons or Pinterest or some sort of in-store kiosk might be worth your testing dollars."Jason Katz, senior vice president, digital, for Acosta Marketing Group, says the return on investment in social media for brands doesn't come with one-time offers. "Social buying and social shopping are long-term initiatives," he says. "If you look at straight ROI and start getting into that one-off model within traditional shopper marketing or trade programs, you're missing the bigger opportunities. What is our long-term approach to engaging? One of the challenges that Groupon has, the payout [for merchants] is not there from an initial transaction, but how does that impact long-term buying behavior, and how do we measure that?"Erin Hunter, head of global CPG marketing at Facebook, says that CPGs have a lot of room to grow in social media, and that there is much promise due to mobile's interaction with social. She says that 51% of smartphone users have searched for a recipe while grocery shopping, and 79% use their phone to help with shopping. "E-commerce for CPG is a small space right now, and I don't think this will change right away; bricks-and-mortar stores aren't going anywhere. With Facebook reaching some 600 million people a month on their mobile device, we're seeing the ability of marketers to influence consumers at the point of purchase skyrocket."One retailer successfully utilizing social media as a spur to not only action but repeat action is Walgreens. Social media manager Zach West says his company isn't interested in recreating its website on Facebook for online purchases because it wants people to visit its stores. Walgreens has demonstrated a close relationship with visit-intensive Foursquare, and the retailer's photo application on Facebook allows users to send their Facebook photos to Walgreens for printing and pickup. "It builds on something that is already a core fundamental to what you do on Facebook, which is exchanging photos, keeping up with people, memories – which really plays well into our photo-printing business," West says. "It drives store business; typically you pick up more than just your photos when you walk in the door."Opportunity AheadAcosta's Katz would like to see the ability to send a list of ingredients and coupons related to online cooking videos to a viewer's phone for a shopping trip. Matt Whitaker, vice president of strategy for Dallas-based agency MEplusYOU, thinks that it's time retail locations begin to recreate the online experience that shoppers are accustomed to by providing adjacent products complementary to a main purchase, and also terminals for search capabilities and reviews. "Replicate what we love about e-commerce," he says. "These are experiences I can't [yet] have in the store."And Pinterest has been on the minds of most involved with social media marketing for at least a year now. Marketers regard it as a "shopping list" site, effective for gathering and sharing users' interests. But for now, there's no commerce engine to complete the cycle.Richard Rizzo, vice president, consumer, shopper and retail insights, at market research agency Vision Critical, says a March 2012 study of 500 Pinterest users his company conducted with Emily Carr University revealed that 12% purchased something they had pinned online, while 16% bought something offline. Overall, one in five users bought items they had pinned. "In my world, that's a good conversion rate," Rizzo says of Pinterest. "It's an addition to the path to purchase and a change that we're looking at a lot harder."

Social Buying and CPGs

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

P2PI MEMBERS

JOIN P2PI

Related Images

Related Articles

Business Topic

Company