Facebook: The Case for Commerce Gets Stronger

My recent ClickZ post took the position that a case could be made for Facebook as a meaningful source of referral traffic for e-commerce. The case is only getting stronger.

A quick recap: the case for community on Facebook is clear: 600 million users, half of whom engage with the brand daily and contribute on average 90 pieces of content a month. Case closed. The case for commerce is emerging.

The core of the case for commerce: Sales = Traffic * Conversion * Average Order Value

Sales originate through traffic. Sources of qualified traffic commerce sites have been delivered in large part via Google, both through SEO and SEM. Facebook as a meaningful source of referral traffic for e-commerce is a trend, and as such, the first element of the case for commerce is emerging.

New Evidence That Facebook Delivers Meaningful Referral Traffic

After my previous post appeared, another strong proof point surfaced: referral traffic to Amazon from Facebook was 7.7 percent in October 2010, compared to 1.8 percent in October 2009. That’s a 328 percent increase in this new source of traffic, according to comScore and J.P. Morgan (January 2011). In October, Amazon was the 11th most-visited site on the Web, and the number one most-visited commerce site, with more than 80 million unique visitors, according to comScore and Media Metrics.

What does that show? That referral traffic from Facebook is growing not only for small retailers or apparel retailers (such as Threadless, Etsy, and Forever 21), but also for the very large retailers and across merchandise categories (Apple and Amazon).

Content (“Earned and Shared Media”) Drives Referral Traffic

A key learning for commerce sites is that paid advertising on Facebook has not delivered results relative to other paid efforts. However, “earned and shared media,” or content, is resulting in traffic. What are the drivers of earned and shared media referral traffic from Facebook? It’s still in the early days – there are only two quarters of meaningful Facebook referral traffic history – so not much performance data has been measured and shared about the range of Facebook sources of traffic. We’re left to ask: Is it more from the wall, the news feed, or the profile? Is it from marketing-generated or consumer-generated content? What type of marketing-generated content is driving the traffic – sales promotions or brand reputation and marketing awareness? What type of consumer-generated content is driving traffic – customer reviews, the “Like” button, or free-form commentary?

Company-generated content: Deals. Early evidence suggests the company-generated content that drives referral traffic is deals. For example, on the fan page walls of Amazon (512,000 fans) and The Gap (1.2 million fans), the company-generated content is primarily deal-oriented. The promotional environment increased in Q4 2010, fueled in part by consumers’ easy access to pricing information through mobile. If the brand is actively using the sales promotion-marketing lever, it’s using it on Facebook, too.

Consumer-generated content: Customer reviews, “Like” button, free-form commentary. Early evidence suggests the “Like” button and customer reviews are driving referral traffic. The practice of “Liking” and sharing customer reviews on Facebook is growing rapidly, and both link back to the product page from Facebook, whether it shows up in the users’ news stream, in her profile, or on a brands’ fan page wall.

Here are some examples of “Liking” and sharing product reviews on Facebook (newsfeed and fan page) with links back to the product page where the activity originated.

Note that the Facebook wall is still an “emerging” social tool for driving sales, but at its current rate of growth, it will soon become a “known” tool.

Seeding the Customer Conversation

Although generating marketing content is a focus for all commerce companies, fostering consumer-generated content doesn’t get the level of resource it deserves relative to its ROI in terms of traffic and conversion (key components in the sales equation), not to mention the undeniable positive impact that it has on customer experience.

Increasing consumer-generated content in the form of the Like button and product reviews for your site is a key tactic for driving referral traffic from Facebook. The following are best practices to increase your customer content and improve referral traffic:

1. Just ask. Promote the areas where you’d like to build your consumer-generated content on-site and off. Include calls to participate in on-site marketing, e-mails, in packaging, on in-store displays, and on Facebook. On average, retailers and brands that send an automated post-transactional e-mail asking customers to share their opinion of a product see three times as much user-generated content compared to those who don’t.
2. Make it easy. Don’t make your customers work too hard. Provide clear, concise instructions on how to contribute, and functionality that helps direct the customer to produce richer, higher quality content. Ask for feedback on-site, provide guiding questions asking about specific characteristics of a product/service, and invite a contributor to include photos, videos, and related links. On Facebook, when attempting to increase fans or initiate some conversation, be clear about how fans can contribute and, if applicable, what’s in it for them.
3. Simple sharing. Help your customers to share the content that they produce and invite others to contribute, as well. On Facebook, actions such as “Liking” a brand or commenting on a fan page wall are inherently shared. The challenge is figuring out how to make a seamless connection of activities on your own site and the social network. Experiment with the “Like” button to start and give users the ability to endorse your products or brand with the click of a button. Then, take things a step further with Facebook Connect functionality that will provide an integrated sharing experience, so when contributing content or commenting, it’s effortless for customers to share their on-site activity with Facebook.