Digital CPG Blog

Following the adage: ‘Go where the users are’, companies have flocked to Facebook, and they’ve increasingly been trying to do more with their Facebook presences in an effort to get the maximum ROI out of the social networking experience.

For some companies, doing more has meant investing in Facebook commerce, or f-commerce as it is widely referred to. The concept is simple – instead of forcing consumers to go to your website to buy your wares, you can hawk them through storefronts on Facebook, eliminating the need for consumers to leave their favorite hangout.

But many of those storefronts are now being shuttered according to a report by Bloomberg. Major brands like Gap, Old Navy, J.C. Penney, Nordstrom and Banana Republic are among those that have decided that f-commerce wasn’t worth it.

The reason? For video game Gamestop, which has some 3.5m fans on its Facebook Page, the ROI simply wasn’t there. “We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly,” Gamestop VP of marketing Ashley Sheetz told Bloomberg.

In retrospect, the fact that some of the f-commerce hype is subsiding isn’t entirely surprising. As Forrester Research analyst Sucharita Mulpuru observes, selling to consumers on Facebook is “like trying to sell stuff to people while they’re hanging out with their friends at the bar.” In other words, it’s not always a good combination.

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Have you seen f-commerce success?

Why set up shop on Facebook?  To sell more product?  Nope.

To build your brand. Yep.

That’s the approach that CPG giant Unilever is taking to launch a brand extension to its billion-dollar mega-brand Axe (‘Lynx’ in the UK) in the UK, ‘Lynx Attract for Her’.  A first 100 cans of the hither-to men-only brand went on sale to the brands 700K+ fans on a pop-up Facebook fan-store.

100 cans at £3.25 ($5.11) netted the brand all of £325 ($511) when they went on sale at 4pm, January 23, 2012 – and sold out pretty much immediately.  Why bother?

Cynics will call it a PR stunt. Unilever can claim “launched on Facebook” credibility for the youth-oriented Lynx Attract for Her. And in the trade press, the stunt has captured headlines.  Good for Unilever sales teams negotiating shelf space in supermarkets and drug stores, and good resumé fodder for the digital team too.

But launching products with pop-up stores on Facebook, and more generally brand-building with pop-up f-commerce is smart branding.

Essentially the Axe fan-store will build brand value by activating brand fans (700K+ registered on Facebook) through fan-first exclusivity.

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Anarchy is the first Axe fragrance to be available in a women’s version, after many years of popularizing the “Axe effect” with young men. The Unilever brand has created many hilarious, often award-winning, commercials around the world to convince young men that the product makes them irresistible. The company, apparently testing Axe’s potential among women, says this is a limited-edition product.

BBH has also developed two Facebook applications as part of the campaign. The “Anarchy Matchmaker” invites people to select Facebook friends they fancy and then notifies them — although it makes the exchange public only if the attraction proves mutual. “Kissing Chaos” invites people to post photos of themselves in smooching poses, and then randomly matches them up with other participants.

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For a few years now, brands have been touting frothy Facebook “like” numbers as evidence of their social-media acumen. But how many of those fans are actually bothering to take part in conversation with brands?

Not too many, as it turns out.

Slightly more than 1% of fans of the biggest brands on Facebook are actually engaging with the brands, according to a study from the Ehrenberg-Bass Institute, an Australia-based marketing think tank that counts Procter & Gamble, Coca-Cola and other major advertisers as its supporters.

“I don’t think it’s a bad thing,” said Karen Nelson-Field, senior research associate for Ehrenberg-Bass Institute who describes herself as a “Facebook advocate.” “People need to understand what it can do for a brand and what it can’t do. Facebook doesn’t really differ from mass media. It’s great to get decent reach, but to change the way people interact with a brand overnight is just unrealistic.”

In the background here is the thinking of Andrew Ehrenberg, the late mathematician who was highly skeptical of conventional marketing wisdom. In dense statistically-oriented papers, he cast doubt on concepts such as brand loyalty and was never sold on the persuasive power of advertising. Now his disciples advocate achieving broad reach through mass media. Brand growth, they maintain, is attained not by reaching a few loyal fans but a larger number of light and medium buyers. In this understanding of the marketing and media worlds, social is just another media channel useful for its reach rather than any notion of engagement.

This research jibes with that thinking, as does a separate study from Ms. Nelson-Field looking at the distribution of buying behavior among Facebook fan bases. In that study, she used web-based consumer panels to examine the behavior of Facebook fans of two unnamed repeat-purchased brands, in the chocolate and soft-drink categories. The key finding was a much greater occurrence of heavy buyers in the Facebook population than in a more general population of customers. The study also found that purchase frequency didn’t increase after someone became a fan.

In other words, Facebook fan bases skew toward heavy buyers rather than the more casual shoppers that a brands needs to reach in order to grow. Again, unless you’re someone who believes marketing on Facebook alone constitutes a full strategy or you’re lining up for the inevitable Facebook IPO, this isn’t all bad news. Facebook does provide good reach and its audience of loyal fans is good for market research and word-of-mouth advocacy.

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1. Heinz’s Balsamic Tomato Ketchup and personalised soup cans
Heinz has been pushing the boundaries in terms of use of Facebook to seed new products, first launching an app to send special bottles of its Balsamic Tomato Ketchup to Facebook fans – which was then rolled out the US after a successful testing phase in the UK.

The personalised soup can app used a similar theory – that passionate fans love unique and exclusive products. People could enter a name of a sick friend and send them a can of soup with ‘Get Well Soon’ on it, choosing from the brand’s three most popular flavours.

2. Burberry Body fragrance launch
Scott Galloway, New York University marketing professor and co-founder of think tank Luxury Lab told WWD.com late last year that almost 100% of brands cite Facebook as a source of upstream traffic. In an interview, said specifically that Burberry gets more traffic from Facebook than from Google.

Burberry is at the absolute forefront of innovation within social media, one example of which is the launch of its Burberry Body fragrance last year. This example is no longer live, but it’s such a relevant campaign that we couldn’t leave it out.

A video starring CCO Christopher Bailey launched the scheme (see below) – and people could apply for a free sample via the Facebook app. Burberry then extended this to allow people to buy full-size bottles of the perfume, with great success.

3. Amazon with Facebook and Max Factor
Procter & Gamble’s Max Factor make-up was for a time being sold on a shop tab on the brand’s UK Facebook page, with the check-out taking place on Amazon.

This is an interesting example, as the purchase wasn’t completed solely within Facebook. You’d imagine that Facebook wouldn’t want to relinquish control of the commerce aspect, and that Max Factor wouldn’t want to disturb its relationships with core sellers by going direct.

Yet the removal of any problems relating to logistics and fulfillment, combined with beautiful design, made this a great match theory. The fact that it’s no longer live however, and the page now links clearly to Boots and Superdrug’s websites probably says a lot about stirring up competition. That’s not to say that such a partnership wouldn’t work for other brands.

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Yesterday, we discussed how CPG brands are winning! with social media. Here’s how you can connect with your social media fans and keep your streak going:

• Social Couponing is Highly Effective: One of the major reasons why people visit a brand’s social media webpage is for discounts and coupons. By offering discounts and giving away coupons, brands a) make their customers feel valued and b) give them a good reason to revisit their webpages. Although some brands are worried that coupons may reduce the premium value of the brand, most agree that social couponing offers unique benefits, one of them being building a loyal customer base. According to a survey from Ipsos Marketing, Consumer Goods, the second most important reason why people visited a CPG brand’s website is to obtain coupons. This explains why the likes of General Mills and Unilever, after partnering with Groupon, have had a solid customer base and a loyal fan following.
• Being Best Friends: It is every CPG brand’s wish to be best friends with their customers. Although coupons and discounts contribute towards making the social consumer feel special, moving up the relationship ladder is all about being available when they have something to say. An overload of sales talk won’t solve your customer’s problems; being best friends is all about listening and responding. Listening in and engaging with your customers online shows that they are important to you and you care enough to be there to soak in the suggestions, act upon complaints and interact with them.
• Going That Extra Mile: When the packaged goods industry ventured into the world of online marketing, it was all about creating interesting online promotional material, offering the occassional discounts and resolving customer complaints when required. This, however, is slowly changing. There are those companies that monitor conversations pertaining to their brands and meet customers’ needs as they arise; and then there are the others that go the extra mile to give their customers much more than they have asked for. General Mills, which has a well connected online customer base, is one such brand.
• Besides marketing their regular range of baked products online, the company also offers gluten-free products aimed at 2% of the population with Celiac disease as well as the additional 10% interested in avoiding gluten, a demographic that was otherwise dismissed as too small and insignificant to target profitably. When the word about General Mills’ gluten-free range was out in 2009, the news spread like wildfire across Twitter and Facebook. Now that’s what we call making customers feel valued!

We’ll finish up the CPG and social media week with do’s and don’ts from real campaigns tomorrow.

For consumers, Facebook’s Like button is a pathway to getting discounts, promotions and special offers. Marketers have a more narcissistic view, according to a new study.

Citing the “Variance in the Social Brand Experience” study from the CMO Council and social CRM firm Lithium, apost from digital intelligence firm eMarketer stated that:

• 57 percent of marketers thought a ‘like’ meant the content on the site was agreeable;
• 41% thought it meant customers wanted to be heard;
• 33% of marketers said they thought customers were looking for incentives or rewards for their ‘like.’

From the consumers’ perspective, the study says they engage with brands through social channels primarily to:

• Be eligible for exclusive offers (67 percent);
• Interact with other consumers and compare experiences (60 percent);
• Find games, contests, and other unique experiences (57 percent);
• Find service and support from their social networking site (50 percent);
• Share ideas for new products and features (41 percent).

There was also a difference between the two groups in terms of perception of customer loyalty. Of the 132 marketers surveyed in the study, only 24 percent thought a ‘like’ meant the consumer was also a loyal customer. Conversely, 49 percent of the 1300 consumers surveyed said they liked a brand because they were already loyal customers.

Most damning was the revelation that, though brands are seeing benefit to the use of social media, less than one-fifth (17 percent) have yet to fully align social channels into the marketing mix.

Ouch.

Bottom Line? Give your customers and fans whatever is valuable to them!  Don’t assume they just want to talk to you. Engage is a huge buzzword, but value is what marketers should really be thinking about.

Hope you had a great Thanksgiving and you’re all caught up! Last week, we talked about “Social Moms”  and continuing on with that research, let’s discover how much “liking” women do on Facebook:

The research focuses in particular on the consumer-packaged-goods category, based on an analysis of 40 CPG brand pages on Facebook. Women account for 65% of CPG Likes, while they make up 55% of the U.S. Facebook population overall and account for 57% of all Likes. This lends support to the notion that women are more apt to Like a CPG brand than men.

“It is very interesting to note that older women make up a large percent of Likes for CPG brands than for average pages analyzed. My assumption is that older women tend to be the decision makers for CPG products in their family,” wrote Fred Stuk, Vitrue’s analytics manager, in the company’s blog.

Looking at the Facebook audience more broadly, it’s clear that younger users tend to be overrepresented when it comes to Likes. For example, 13-17s account for 29% of Likes generally, although they only make up 6% of the U.S. Facebook population. Similarly, the 18-24 age group is 24% of the Facebook audience, but drives about 38% of Likes. By contrast, the 35-44 bracket makes up 28% of the audience, but only drives 8% of Likes.

On the face of it, f-commerce seems to be taking off, so should brands be launching F-commerce stores? Econsultancy investigates:

Brands use Facebook for two reasons: to reach the widest pool of consumers by going where their customers are congregating; and because of the potential for consumers to share information with each other, effectively marketing the brand to their friends.

So why do consumers use brands on Facebook? Ultimately, they’ll buy from retailers they know and trust. A social media campaign may not yet mean that consumers buy from the brand on Facebook, but if [UK retailer] ASOS is anything to go by, it will influence sales through the brand’s site.

And, after all, isn’t that a better result for the retailer [or manufacturer] who’ll have more control over the buying process?

But f-commerce shouldn’t be simply a replica of an e-commerce experience. Nor should it cannibalise sales from the brand’s website. Facebook can be a great place to trial exclusive or new products, as long as the brand is prepared to listen to feedback and act on it.

I agree with this analysis. As we talked about earlier this week, putting all your eggs in the Facebook basket is dangerous. But Facebook can be an extremely viable piece of your strategy.

For better or for worse?

A comScore analysis of online ad impressions from July shows CPGs have become the heaviest users of “socially enabled” ads that appear on sites outside Facebook but include “visit us on Facebook” or other “Click to Facebook” appeals to get users to brand pages.CPG marketers are 10 times more likely than advertisers to use “socially enabled” ads, which appear outside of Facebook but urge visits to a Facebook site, finds a comScore analysis.

They were 10 times more likely than advertisers generally to use socially-enabled online ads.

“In many ways the fan page is replacing the brand website as the primary destination for outbound marketing online,” said a comScore executive.

The only thing that makes me nervous about this is that it is a short-term strategy. Yes, Facebook is HUGE, but wasn’t MySpace? I worry when marketers spend all their time, energy and money building on one platform only to have it disappear a few years later. ultimately, marketers should have a diversified strategy that always includes their own brand website where they have full control on collecting data and emails.