Can Social Media Help You Sell?

There are very few Internet users who are interested in buying based on product promotions on social media sites. While 83% of the Internet population (ages 13 to 54) participates in social media – 47% on a weekly basis – less than 5% of social media users regularly turn to these sites for guidance on purchase decisions. A new report by Knowledge Networks reveals this on May 20.

According to the report, only 16% of social media users say they are more likely to buy from companies that advertise on social sites.

With similar findings research firm IDC says ads on social networking services (SNS) have lower click-through rates than traditional online ads and they also lead to fewer purchases.  IDC expects that lower-than-average ad effectiveness on SNS will continue to contribute to slow ad sales unless publishers get users to do something beyond just communicating with others.

Even YouTube, a seemingly popular social media site for video sharing, is struggling and costing the owner Google $1.65 million a day. The revelation comes from Internet Evolution that discusses the future of Internet.

“Social media use” was defined by Knowledge Networks as having visited any one of 27 social sites or having used social features on other sites. Participation in social media is indeed widespread among those 13 to 54; but when Knowledge Networks asked users whether they regularly turn to these sites when trying to make a purchase decision, the highest percentages among nine categories were 4%, for travel and banks/financial services. Responses for clothes/shoes, restaurants, mobile phone services and five other categories ranged from 1% to 3%.

Here’s proportion of users who turn to social media when making purchase decisions (Figures in % “Regularly” and “Sometimes” turn to social media):                                         

•     Travel or travel services (4 and 24)
•     Banks or financial services (4 and 10)
•     Clothes or shoes (3 and 23)
•     Eating out or restaurants (3 and 21)
•     Cell/mobile phones and service (2 and 21)
•     Personal care products (3 and 15)
•     Cars or trucks (2 and 15)
•     Groceries or food (2 and 13)
•     Prescription or OTC drugs (1 and 10) 

“How often do you refer to social media websites or features as a resource for information, reviews, or recommendations when in the market for (category)?”  Base: Social media users (N = 418)

The study, How People Use Social Media, was produced as part of The Home Technology Monitor, a service that provides views of which media technologies people own or have access to, as well as how they are integrating those technologies into their everyday lives. The research was conducted from March 10 through 16, 2009, among 502 members of KnowledgePanel, an online panel based on a representative sample of the full U.S. population.

Almost two thirds (63%) of social media users agree that ads are a “fair price to pay” for use of these sites and features; but a much smaller proportion (16%) say they are more likely to buy from advertising brands. “Staying connected” – to friends and family, as well as meeting new people – is by far what is “most liked” (54%) about participating in social media.

The study also shows that:

• 34% of social media users report using these sites or features more often now compared to a year ago, while 18% said they use them less
•  just 1% of the total online population – and the same proportion of social media participants – uses Twitter once a week or more
•  60% of social media participants say they only access these sites and features at home

The report covers topics such as how social media use affects media choice, feelings about advertising on social media, and differences between users and non-users of social media.

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