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Social integration into mobile results in customer acquisition: keynote

GRAPEVINE, TX – Executives at Facebook and Groupon discussed the potential benefits for retailers of blending social and mobile during a panel at the National Retail Federation’s conference.

The panel was introduced and moderated by Josh Goldman, general partner at Norwest Venture Partners, Palo Alto, CA. Both panelists discussed the importance of combining reach with local relevance.
“We’ve built various culturally-relevant, language-relevant applications so users worldwide can have a locally relevant experience on their smartphones,” said Mike Murphy, vice president of global sales at Facebook, Cupertino, CA. “Looking to the future, imagine a TV set top box, but instead of channels, there are recommendations from friends who watched Entourage and your mom who recorded this show for you.

“The basis of Facebook is the user-generated social graph, and other things are built on top of it,” he said. “Facebook Places is designed to put more content into the social graph, allowing our users to have another mechanism to provide information, and it wasn’t originally intended for commercial purposes.

“We are testing retailers in beta to allow them to distribute location-based offers [via Facebook Places], and the results of the beta-testing will determine if and when we roll it out on a wide scale.”

Social networking giant Facebook took in $800 million in revenue in 2009 and is on track to exceed $2 billion this year.

The site has 500 million-plus registered users, 50 percent of whom visit daily. The average user has 130 friends.

Facebook users spend 700 billion minutes per month on the site, and 30 billion pieces of content are shared per month.

There are 550,000 Facebook applications available, and 70 percent of users interact with applications.

Every day, 65 million Likes are added on average.

Facebook has mobile Web sites, including one for smartphones with a touch-screen interface, and applications for various operating systems, including iOS and Android.

“The real difference between Facebook as a platform and some other Web sites out there is we believe that our role in the model is to be a template available to brands and retailers to make connections with consumers,” Mr. Murphy said.

“We go out of our way to make tools available so companies can participate in and on Facebook,” he said. “There are pages for retailers of all sizes, and it is not our place to root for one to win or rise to the top.

“Our hope is that retailers take advantage of opportunities to create connections with consumers on Facebook.”

Mr. Murphy cited various retailers that have had successful integrations with Facebook.

JCPenney has done a fantastic job with philanthropic efforts, which also enable the company to create relationships with consumers and distribute customized offers.

Levi’s did a program over the summer to create connections with consumers and look for insight about how to launch upcoming products.

Retailers can integrate Facebook Connect or Facebook Like into their Web site, and HTML code letting consumers sign into Facebook so they can share reviews and other activity with their friends.

Consumers can also complete transactions on Facebook.

For example, 1-800-Flowers uses third-party applications to bring consumers through the purchase cycle on Facebook and complete the sale on its site.

“With our partners we’re confident we can build a much better, richer shopping experience on Facebook,” Mr. Murphy said. “It allows customers at the point of purchase to make good decisions based on feedback from friends.

“We’re working with hundreds of retailers to figure out what works best,” he said. “Consumers that ‘Like’ are four times more likely to buy from that brand.

“Facebook Credits is designed mostly for virtual goods, not hard goods.”

Founded in November 2008, Groupon has received $173 million in total funding, and its April 2010 valuation was $1.35 billion.

Groupon’s revenue was $30 million in 2009, and it is projected to be between $300 and $500 million this year.

There are approximately 25 million subscribers to Groupon’s daily emails, and it gets 10 million unique users per months.

Groupon will support 100 cities by end of the year.

Groupon lets consumers purchase, manage and redeem Groupons—time-sensitive, location-based discount offers—directly from their mobile device via applications for the iPhone, Android.

Application users can browse and buy local deals, search nearby Groupons using GPS, keep track of all their Groupons by location, date and expiration, and take advantage of paperless redemption.

“The Groupon model is pretty simple, but pretty unique—we’ve come up with a way to take the Internet and drive transactions into the physical world,” said Rob Solomon, president and chief operating officer of Groupon, Chicago. “It’s really a Holy Grail quest—how to you get people from the Internet into bricks-and-mortar stores?

“The model is come up with an amazing offer, and we’ll blast that out to our audience,” he said. “We’re really good a get people to come into retail stores—we’re a customer acquisition tool.

“It’s up to retailers to figure out how to monetize those customers and getting them to come back by providing great customer service.”

Mr. Solomon said that typically Groupon sells anywhere from 500 to 500,000 units for a local retailer.

Groupon claims there is no other model where consumers are already paying customers when they walk in the door.

Mr. Solomon predicts that social retailing or social commerce will be really big one day much like the growth trajectory of mobile.

“Mobile was going to be big, mobile was going to be big, mobile was going to be big and now it is,” Mr. Solomon said. “Mobile always had so much potential, but it couldn’t become big until smartphones became widespread.”

In one example of a recent Groupon campaign, Gap acquired 5,000 customers in one day.

Local commerce is very social, and mobile and local go hand-in-hand.

It makes sense for online and offline retailers to be where consumers are most engaged, and that is on their social networks and mobile devices.

“You can have consumers share what they’re looking for, what they’re buying and what they want to buy—you can sell a lot of product and engage in a different way,” Mr. Solomon said.

“We are primarily a new customer acquisition vehicle, but depending on the margin of the business, a Groupon campaign could generate incremental sales,” he said. “A lot of the categories we deal with have very perishable inventory, which if unused is a lost revenue opportunity.

“We tend to see a lot of businesses at least breaking even with deal one, and generating consumer loyalty that more than makes up for that margin hit they take from the discount offer.”

Here is a picture of the panel:

Final Take