The difficult part about monetizing social or finding a way to drive revenue through social is that there really isn’t a compelling reason for me to buy something that one of my friends buys… unless I happen to be looking for exactly that thing… right now. By the way, that’s what Search is for…
Whenever anyone does a study (that is not funded by Facebook, Twitter or someone with a vested interest in the social media ecosystem), the results are generally the same. Social drives a really tiny part of traffic to retailers. After the 2012 holiday season, when Adobe looked at last click traffic to retailers they found that only 2% of traffic (this is traffic, and not conversions) were directly from social sites.
So when people start talking about how social and payments can come together, the natural inclination is to think about social commerce. And within that line of thinking, most people want to innovate on ways to sell stuff on Facebook or Twitter.
I would argue that we’re using the wrong definition for social when we think about driving revenue, and that’s why we’re getting caught up in the trap of social commerce.
From a brand perspective, social networks (Facebook, Twitter, LinkedIn, etc.) are extremely effective marketing and communication tools, however from a commerce perspective, a collective brain or wisdom of the crowds approach to social (Yelp, TripAdvisor, Amazon reviews, etc.) can help drive the right revenue generating actions from your consumers.
One of the reasons that suggestions for restaurants, products and trips are so effective on these social sites is that you need a really big pool of people commenting and evaluating to be meaningful. While there is validity to the fact that my tastes more closely align with those of my network, it’s hard to deny the benefits of a significantly larger sample size… even if there are more outliers whose opinions I would prefer to ignore.
Which brings us to payments and how that can fit in with a wisdom of the crowds approach to social. And the answer is more in the payments data than the simple transactional element of payments.
Amazon has perfected the ability to combine reviews with purchase data to show the most relevant products. It’s gotten to the point where the first item shown is usually always the item that I buy… even when I take 30 minutes to research the other items of pages below.
Last October, American Express teamed up with TripAdvisor to have their customers post verified Amex reviews for places where they have actually made transactions. This gives more trust and validity to reviews, and it’s something that Amazon has begun doing as well, in order to combat “review trolls” and ideally help convert views into paid transactions.
Imagine if TripAdvisor could show locations by the number of times someone stayed at a hotel or if Yelp could do the same with the number of times someone ate at a restaurant or how much they spent. As TripAdvisor moves into travel bookings and Yelp plays a bigger part in the various transactions in their ecosystem, this could be pretty impactful. Bundle.com was already aggregating anonymous card spend data to provide recommendations on restaurants before they were acquired by Capital One in 2012. The trick is going to be merging all of the payments data that companies like Amex, Capital One, or First Data have in their databases and incorporating some anonymous version of that into a social experience like Yelp.
We just need to stop getting fixated on social commerce, and think about how payments and social can work together to drive real revenue. A few key partnerships, and we’re really getting there.