By Nicole Maestri - Analysis
SAN FRANCISCO (Reuters) - This will be one very social Christmas.
From Facebook to Twitter to YouTube, retailers and food chains plan to use social media this holiday season to get their brands in front of consumers and possibly win a bigger piece of their limited shopping budgets.
Companies ranging from Starbucks Corp (SBUX.O) to J.C. Penney Co Inc (JCP.N) to Target Corp (TGT.N) said social media is helping them interact directly with consumers and get feedback on everything from ad campaigns to product launches.
They are now putting more resources toward social media, and incorporating it into holiday marketing plans.
“This is going to be a really interesting holiday season with social media,” said Chris Bruzzo, Starbucks’ vice president of brand, content and online. “It just wasn’t this far along last holiday season.”
While companies wanted to keep specific plans under wraps, they said they will use sites like Twitter and Facebook to post their best holiday deals to reach loyal consumers.
But the question remains how many of those fans, friends and Twitter followers will translate that loyalty into sales.
Social media is a “shiny new toy,” said Zain Raj, chief executive of loyalty marketing firm Euro RSCG Discovery, but it has not yet been able to “clearly prove that it can have a meaningful impact on sales for most companies or brands.”
Social media is luring an increasing number of consumers. Facebook has 300 million users, up from 250 million in July.
Companies are shifting dollars away from traditional marketing and putting them toward interactive marketing, according to Forrester Research. It estimates that spending on social media marketing in the United States will reach $716 million this year and grow to $3.11 billion in 2014.
Meanwhile, a Shop.org survey of online retailers found 47.1 percent plan to increase the use of social media this holiday.
Starbucks is using Facebook, Twitter and YouTube to interact with consumers, and Bruzzo said it noticed the power of social media last holiday.
On December 1, Starbucks said it would donate 5 cents from the beverages sold in its coffee shops to the Global Fund for World AIDS Day. To get consumers to come to Starbucks that day, it hosted a Facebook event and asked fans to invite friends to participate. Nearly 1 million people accepted the invitation.
Bruzzo said the chain saw an equally impressive turnout this summer, when it let Facebook fans print out an invitation to get a free pastry at Starbucks when they purchased a drink.
Panda Express has also seen the power of social media, albeit on a smaller scale. To celebrate its new SweetFire chicken breast, on Sept 25 it allowed Facebook fans to print a coupon so they could visit a restaurant and try it for free.
Chief Marketing Officer Glenn Lunde said 25,000 coupons were redeemed and traffic in its restaurants rose that day.
“We were very pleasantly surprised,” he said “I don’t think we thought we would really see a big difference that day.”
Social media is also giving companies a direct link to customers to find out their wants, needs or even gripes.
When Target asked its Facebook fans this summer what they thought of its men’s clothing, it found consumers wanted a wider range of sizes and more designer duds.
Kent Hathaway, who oversees its social media efforts, said Target is using the feedback to tweak its assortment.
Best Buy Co Inc (BBY.N) is now promoting its Twelpforce, where its employees respond to consumers’ questions and offer tech advice on Twitter. This holiday, it said it will use Twelpforce to help customers figure out which gifts to buy.
Raj said companies need to keep social media’s potential in perspective. He pointed to Dell Inc DELL.O, which has said it raked in more than $3 million from Twitter followers who clicked through its posts to its websites to make purchases.
But he said that is “not even a drop in the ocean” for a company that posted $12.3 billion of revenue in the first quarter of this year alone.
Many companies said they are still trying to figure out how the media can be used to support sales beyond generating a one-time boost, while also not becoming overly promotional.
Panda Express’s Lunde said Facebook allows it to connect with its loyal fans, or “fanatics.” It now needs those fans to spread the word to other potential consumers.
“It’s really about how do we inspire our fanatics to get excited for themselves and even more importantly for their friends?” he said.
Penney used Facebook to promote its back-to-school merchandise, and noticed its fans were then swapping different Penney deals with one another.
“We’re seeing a lot of areas of engagement,” said Nick Bombersbach, who oversees Penney’s social media. “The question now is how do we turn around and turn that into traffic?”
Additional reporting by Martinne Geller and Dhanya Skariachan in New York; Editing by Steve Orlofsky