Frustration: Thy Name Is Social

Written by Evan Schuman
September 27th, 2011

Shoppers going to E-tail sites from Facebook and Twitter are much less likely to make purchases; but when they do make a purchase, it is sharply higher from these social network referrals than from other types of referrals, according to a recent report. Those Twitter purchasers also seem willing to pay more for the same merchandise. This apparent contradiction—actually, it’s more of a nuanced distinction than a real contradiction—is interesting as much from a “what do we do about that?” perspective as from a “is this really valid?” take.

The simplest way for a site to guess whether another site is influencing purchases is to review referral link logs, to see where customers were right before. That method, however, doesn’t make much sense with many social sites. A Twitter visitor, for example, will likely click on a link to read the reviews/photos/thoughts of a Twitter connection, and only after that—and perhaps one or two more links—will the customer visit the retailer’s site.

The report, from an E-Commerce vendor called RichRelevance, is interesting in that its methodology appears mostly valid and it tackled questions that most others sidestep. That said, the E-Commerce influence of social media sites—especially one as narrowly focused as Twitter—has always been next to impossible to quantify.

Given that a retailer’s goal is to understand what is causing its sales, limiting the analysis to direct visits is unwise. Coupling this detail with the study’s conclusion that the identifiable Twitter activity was sharply higher, should demonstrate that the social value is likely being dramatically underestimated.

Let’s look at the numbers. Referral percentages ranged wildly, from Google being responsible for 80.62 percent of E-Commerce traffic to Twitter leading to 0.02 percent of traffic—that’s two one-hundredths of a percent. In between were Yahoo (9.67 percent), Bing (7.45 percent), AOL (1.74 percent) and Facebook (one half of one percent).

You really have to look at those social figures—especially Facebook—and wonder if they could possibly reflect reality, particularly in the teenage and youthful shopper segment. Referrals and testimonials from friends can have a huge impact on purchases.

When looking at how much those referred consumers spend—the average order value (AOV)—things get even more interesting. Here’s how the dollars change when looking at those same six referrers: Google is the lowest (AOV $100.16) and Twitter is the highest ($121.33), with the in-between players of Facebook ($102.59), Bing ($104.62), Yahoo ($105.13) and AOL ($105.27) showing just about zero correlation between “who sends the most” and “who brings in the most money.”


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