E-commerce in the (social) networked environment is different from e-commerce in the past. We are all familiar with being bombarded with commercial messages, through online video commercials, banner ads and pop up windows. We have learned to avoid, deflect and tune out most of these marketing strategies.
Increasingly, If we are looking for something, we will shop around, consult user reviews and ask friends for advice. More and more these conversations are happening online and marketers are angling to be a part of these discussions. This is the second article in a series exploring social network trends in online commerce and how some Northwest companies are navigating and even changing the new landscape.
The ancient method of people making recommendations to each other for products and services using word of mouth is suddenly the hottest advertising strategy on the Internet. Facebook and other social media networks are giant marketing tools. But so far, most consumers have lacked a way to buy products or services without leaving the site. For the founders of aptly named DIY Media in Seattle, this conundrum seemed like a great business opportunity.
The problem with peer recommendations is that, in order for consumers to act on recommendations, they have to search for the recommended product. This almost always means that a potential customer has to leave the site where they heard the recommendation. In what marketers call the “conversion funnel” that is one barrier for a potential costumer to complete a purchase. In the rare case that a customer does find something they want to buy on a social network site, then they are invariably redirected to a new site to complete the transaction, which is another opportunity for the customer to jump out of the funnel.
“Facebook is like a giant shopping mall with no stores,” says Jim Lively, one of the DIY Media founders.
According to Lively, the DIY Media business strategy is to make any digital content online for any digital medium available. DYI Media targets those who are downloading digital content for their Kindles, Sony e-readers and Nooks. They are also targeting people online as well through games and music sharing.
In January 2011, the Seattle startup launched a portable storefront – a virtual ice cream truck for digital content. “You drive the ice cream truck down the road, and you draw people out. They look at your inventory, sample it and spend money right there,” Lively says, listing big entertainment brands such as Warner and Sony among their clients.
DYI Media started with music, out of the founders’ frustration with iTunes and the iTunes music store. For starters, iTunes has about 70 percent of the market, Lively says, pointing out that Apple no longer control that large of a market share in terms of devices. Furthermore, once consumers arrive at iTunes, they are bombarded with so much content that a lot of users never purchased what they came for.
“You want to buy it where you find it. With our portable storefront, your friend can put a link to the item there right in front of you,” Lively says, “You click on it to pull up the content, click on the songs you like and there is a tally on the side that reflects the changes you make – you add a song the total price goes up, you take away a song and the price goes down,”
Finally, the links can be shared. This is the social element that is a key part of DIY Media’s business model.
“If you share it with your 500 friends, it shows up in your update stream. If you post it on your friend’s wall, it is also visible to their 500 friends. By the time it’s been shared three times, 64 million people have seen it. That’s the power of Facebook,” Lively points out–and the power of word-of-mouth. The most reliable and tested marketing strategy we know of, and it is literally under each of our noses.