Diminishing Returns? Facebook, Twitter Promotions Don't Give Retailers a Needed Boost

Purchases initiated on social media sites such as Facebook are down.


It seems retailers are having just as much trouble getting shoppers to spend money on their websites as they are in their stores.

Total online sales for the second quarter were down more than 2 percent from last quarter, according to the latest Retail Online Index from IBM. The lackluster web numbers come on the heels of a disappointing retail sales report from the Commerce Department Monday, which showed a third straight month-over-month decline in sales.

"Retail sales have hit a brick wall, plain and simple," Chris Christopher, economist at IHS Global Insight, wrote in a report Monday. "This report is in line with poor job numbers, declining consumer confidence, and a volatile stock market."

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Even promotions and sales advertised on social media sites aren't giving retailers the boost they'd hoped for. Purchases stemming from social media interactions on sites such as Facebook and Twitter saw a 20 percent drop in the second quarter, a big bummer given the push retailers have made to increase their presence on social media sites.

But as ubiquitous as sites like Facebook and Twitter are for many Americans, using them in a marketing strategy is still fairly new, experts say. Marketers are still trying to figure out the best ways to leverage social media to drive traffic to retailers' sites and produce purchases.

"It's in the awkward teenage phase," says Jay Henderson, strategy director at IBM Digital Marketing. "It used to be the cute baby that everyone wanted to hold and 'ooh and ahh' over, and now it's a little more the angst-filled youth."

But as marketers try to rein in and harness the temperamental nature of social media, consumers' attitudes toward it cooled in the second quarter. Positive sentiment around social media dropped more than 6 percentage points, a potential result of retailers failing to deliver compelling campaigns through those channels, the report said.

Still, Henderson doesn't see the decline in sentiment as a major warning sign. It's more likely due to the relative dearth of deals and promotions marketers launched through social media last quarter. As with many new channels, marketers make a push for presence then pull back and reevaluate their strategy.

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"It's reflective of marketers' uncertainty of how best to utilize social media, not necessarily reflective of a lack of long-term importance. It's not like it's going away," Henderson says.

The reason why it's not going away? The sheer power social media has to reach many more consumers than traditional marketing schemes.

"You have this ability if you do it right where you don't just get to market to those people directly, you get those people to share the marketing message or promotion with their friends, which increases your ability to reach more people," Henderson adds.

Meg Handley is a business reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.