How can retailers generate revenue from Snapchat?

This article originally appeared in Retail Week magazine

Anaylsis: How can retailers generate revenue from Snapchat and other social media?

Snapchat has millions of users worldwide and the business recently announced that ecommerce functions might be just around the corner.

Hours before the catwalk launch of its Spring/Summer 2016 collection, as last-minute finishing touches were still being made, Burberry gave its fans a peek behind the curtain.

In what chief executive Christopher Bailey described as a “unique, real-time view of the creation of our show”, the retailer posted dozens of photos from behind the scenes, live to its millions of followers on Snapchat. A month later came another first – a full Snapchat advertising campaign, featuring product shots by famed fashion photographer Mario Testino, months ahead of the full print launch. Burberry was breaking new ground. And with more than 200 million views of the SS16 collection on Snapchat alone, breaking records as well.

Burberry has also become the first brand to use Snapchat’s ‘Snapcode’ QR-code style feature that when scanned takes shoppers to the social networking app and delivers them exclusive content in store. That content includes a director’s cut of the new advert for the Mr Burberry fragrance.

Throwing out the rulebook

Social media has already made the old marketing rulebook virtually redundant. Within a few seconds a product shot can be seen, liked, posted and shared by millions of users. Within a few hours a trend can be born.

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And there’s a race to develop ecommerce functions now underway, escalated by the news in February that Snapchat is working on its own sales functions.

Boo Hoo

More and more retailers are using Snapchat to reach shoppers

Speaking at a conference in February, Snapchat director and Cosmopolitan editor-in-chief Joanna Coles publically confirmed, after months of speculation, what could be a major step forward in the evolution of social media and in ecommerce. Cosmopolitan’s publisher, Hearst, is working under the bonnet of one of its existing Snapchat channels which, she said, will eventually “morph into an ecommerce platform”.

The details are not yet clear and, as Coles admitted, the technology has some way to go. But if Hearst succeeds in generating revenue from Snapchat content, it will be a major advance for ecommerce that etailers and retailers will be closely watching.

So with such huge potential building, how can retailers and etailers take advantage of the hottest social media tools and, most importantly, convert all that hype into sales?

Infinite marketing potential

As early adopters such as Asos, Topshop and Burberry have proven, there is a seemingly infinite marketing potential in social media. But despite the enormous wealth of opportunity, there are plenty of dos and don’ts.

River Island using Instagram

River Island uses various social media platforms to reach consumers, including Instagram

Thomas Husson, principal analyst for marketing and strategy at Forrester, says it’s a question of communication. He says: “Retailers have to spark conversations with consumers, not sell ads. The challenge for them is thus to design relevant content throughout the customer life-cycle and to tailor content by site.”

And Lucy Freeborn, insight and strategy director at digital retail marketing agency Leapfrogg, says some retailers have done better at this than others.

She says: “The retailers that are the most advanced with this are the ones who started out as etailers or catalogue retailers, not the bricks-and-mortar retailers. Social media has become a really important part of the marketing mix. For some people the ultimate objective is brand awareness; engaging with the audience and getting them to share your content, which social media is perfect for.”

Asos’ own journey through social media reflects the evolution of the media itself. Initially only operating on Facebook and Twitter, the etailer found its followers were crying out for them to move to the latest platforms.

“We don’t have stores, so social channels are a great place for customers to have a bit of an Asos experience. On Snapchat that is all about showing what goes on at Asos and letting people hang out with the teams here”

Hannah Craik, Asos

Hannah Craik, head of social media at Asos, says for an etailer without the physical space for its customers to engage with the brand, the use of social media has a special role.

She says: “We don’t have stores, so social channels are a great place for customers to have a bit of an Asos experience. On Snapchat that is all about showing what goes on at Asos and letting people hang out with the teams here. On Instagram it is more about the great imagery, and things we think our customers would love to have in their life – sometimes Asos fashion, but also food, landscapes and even pets we know they will love.”

Cross-platform presence

River Island Snapchat

River Island develops social media content based on target audience and engagement

Another retailer with an active presence across multiple social media platforms, River Island has invested fully into the new more mobile way of doing things. River Island customer director Josie Roscop says: “We develop content that suits the medium, whether it’s Facebook, Instagram or Snapchat, and review based on how customers engage with the content. Ultimately, we’re continuing to innovate and provide customers with the most exciting and accessible journey possible.”

Creating an exciting journey is one thing; turning that into sales and profits is another altogether. And this, says Freeborn, is by no means easy.

She says: “Ecomms revenue from Facebook and Pinterest has absolutely shot through the roof. But there’s also an awful lot of wastage in social media; you get brands doing it because they think they should. But you have to know your target audience. Understanding your customer is the easiest way to increase revenues from social media and investing in insight to do this is the most important starting point.”

“Understanding your customer is the easiest way to increase revenues from social media and investing in insight to do this is the most important starting point”

Lucy Freeborn, River Island

Craik says that even without direct sales from social media, the intangible effect of increased brand loyalty and awareness is as vital as ever.

She says: “Although some marketing activities can be less directly tied to revenue than others, it is well proven that the companies with the strongest brands have the best market capitalisation as well. Providing the best services and being relevant to customers all contribute to how they feel about your brand overall, and at Asos we think that having a great relationship with your customers is the best way to make sure you have a sustainable business.”

A leap forward

The potential for social media as a marketing tool is unassailable. But as things stand, masses of attention and awareness don’t necessarily translate into masses of extra sales. For that to happen would require yet another leap forward – perhaps the type that Snapchat and Hearst are working on.

Snapchat’s move into ecommerce would bring a major player into the game and millions of potential shoppers to the market. As ever, whether they shop and how much they spend will be down to the retailers.

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