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Forrester and GSI just released a study by star analyst Sucharita Mulpuru showing social networks are not effective channels for ecommerce.  The oldies – email and search marketing – perform far better.  (Available free on the GSI website here.  Data cited in Mashable here.)  In a universe of endless, self-promotional, vendor-funded studies, this one should get more than it’s share of your attention because the sponsors gain nothing (but credibility) from spreading these conclusions.

In the face of this withering evidence, we think it’s a good moment to review the distinction between social media marketing and social commerce.

• Social media marketing is about delivering a commercial message on social media sites.  It is a hub-and-spoke model of communication where the brand is the hub and customers/prospects are at the end of each spoke.  It’s getting people to Like your fan page or to Follow you so they’ll accept your messages in their news feed.  Social media gurus say you must “listen” carefully and that your tone when you speak must be “authentic”, advice that inherently assumes the dialog is between YOU and THEM.  Social media marketing is comfortable to most organizations because it’s basically the old stuff, just in a new place.
• Social commerce is about facilitating interaction between your customers and prospect about you.  You are not at the hub of the network; rather you provide tools that encourage discussion amongst the members (and prospective members) of your community.  That discussion about you is happening anyway, but usually only in response to extreme experiences – positive and negative.  But if you lower the barriers by providing the right tools, you can greatly increase the amount of discussion about you (and improve the tone, too).  And that leads to increased sales.  These tools can run on your own ecommerce site, on social networks, or on content sites across the web.

The Forrester / GSI study takes an ax to social media marketing, but not to social commerce.  I like the analogy Fiona Dias of GSI uses to explain why social media marketing doesn’t work: just because lots of people go to church doesn’t mean church is the right place to advertise.  Similarly, just because lots of people are on Facebook doesn’t mean Facebook is the right place to deliver your commercial message.  Context matters.  And while the Facebook context may not be right for brands to deliver their commercial messages, it is definitely a good place for brands to facilitate discussion between members of their community.

We think most brands should reconsider their social strategies – and especially their Facebook presence – in light of these findings.  In particular, they should stop using their Facebook presence as just an extension of their existing brand or ecommerce website and instead think of it as a place to host discussion among the members of their community.  They should also think about how to add tools to their ecommerce sites that facilitate dialog between prospects and customers.  And finally they should think about how to tie all of these community presences together so that dialog in one location is visible on all.

That’s social commerce, and it’s alive and growing.

I was recently on a Social Commerce panel (photos here) for Social Media week hosted by Digitas in NYC.  (Thanks Beth McCabe, Noah Mallin, Jonathan Burg, and fellow panelists Matty de Castro of Facebook and Bob Tuttle of 8th Bridge!).  One of my fellow panelists put up a screen shot of the Levi’s Friends Store as an example of Social Commerce and provided an opening I couldn’t resist.

Look in the lower right: Levi’s has 2.9m Facebook fans.  That’s 2.9m people who have agreed to allow Levi’s to send them messages in Facebook.  Not bad!  Now look at the Original 501 Stonewash jeans.  450 people have liked this.  Only 450 people.  How many people do you think own these jeans?  And Levi’s Friend Store was Facebook’s poster-child ecommerce partner when they launched the Like button.  In fact, for several months, Levi’s entire online store was the Friends Store.  (Even now, the Friends Store is one of the main menu options.)  So it’s not like the feature was hidden.

Thank you Levi’s for providing such a clear illustration of the main challenge of Social Commerce.  What’s working well for Levi’s is leveraging Facebook to enable dialog between the brand and their customers.  That’s the 2.9m fans.  But that’s not Social Commerce, it’s Social Media Marketing.  Social Commerce is encouraging commerce-related conversation between customers.  That’s what the Like button next to the individual products is for.  That’s the 450 people who have Liked the 501 Stonewashed.  And that’s what’s not working.  (You can define the terms differently if you like – I don’t really want to provoke an argument about definitions; the distinction between customer-to-brand vs. customer-to-customer is what’s important.)

Why is it so much harder to get people to share product and purchase information with each other than it is to get them to accept marketing messages from a brand?  The biggest reason is this: the stigma against shilling has not disappeared just ’cause now we share on social networks.  Any time a statement can be (mis)interpreted as “trying to get your friends to buy something”, all sorts of alarms go off.  Not to mention all the other baggage that goes along with sharing on wealth-related topics.  (She can afford that?!  Is that the best he can afford?!)  Content sharing on social networks has been a runaway success.  But when the subject of the sharing is product/purchase/commerce, the sharing rate falls off a cliff.  (Acknowledging some exceptions: discount offers, especially deep ones, get shared.  And commerce objects of exceptional interest get shared – I’d argue that this is better understood as content sharing, tho.)

Does this mean that if you sell stuff, you should forget about trying to connect your shoppers and your customers with each other?  No way.  You can try the discount-offer and too-cool-not-to-share end-runs.  You can even go the full-on viral content route where your brand/product message is just a low-profile passenger.

Or you can try a radically different approach we call Contextual Sharing.  More on that in a later post.

Together with our partner, leading Yahoo Store builder FastPivot, we produced this webinar on Social Commerce strategies on Wednesday.  Here are all the slides plus the complete audio (controls are just under the slides). Thanks to the many attendees! The

FastPivot part runs through slide 35.  They provide a broad overview of social media marketing packed with actionable recommendations.  Starting at slide 36, we do an 18 minute discussion of Onsite Social for e-Commerce.  If I do say so myself: it too is insightful and practical.  Enjoy!