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Retailers 'Friend' Facebook as Marketing Budgets Shrink

When Staples decided on its Black Friday specials this year, it knew the deals wouldn’t stay secret for long. In the Internet age, retail surprises are quickly becoming things of the past as ads leak online weeks before their official unveiling.

Rather than letting a third party decide when its doorbusters would be announced, the company used social networking to introduce them itself, spilling the beans directly to its 1,774 Twitter followers and 62,000 Facebook fans.

Staples was hardly alone this year. Retailers have broadly embraced social media, using it to market deals and, in some cases, to interact directly with customers.

It’s about more than just announcing sales, though. The direct line of communication with customers also allows retailers to reclaim control of their marketing message.

In previous years, as Black Friday ads leaked online, they were often accompanied by commentary from the sites posting them. For retailers, it was nearly impossible to fight back when an influential blogger had labeled a sale as ‘disappointing’.

Those bloggers are still out there, but now retailers have a larger hand in creating customers’ first impressions.

Sites such as Facebook and Twitter represent cheap—virtually free—marketing, something that’s especially crucial this year. Rather than spending hundreds of thousands of dollars on an ad campaign with a limited life span, companies can hire a low- or mid-level employee to maintain the sites and dialogue with customers.

They also turn customers into evangelists, as they "retweet" or re-post specials that caught their eye.

“Advertising, as a medium, is dying because there are so many mechanisms to bypass it,” says Scott Olson, president of Mindlink Marketing. “[Social media] is something you get ongoing benefits from.”

In a new BDO Seidman survey, more than half of the retailers queried said their advertising budget this holiday season is flat—with 26 percent reducing marketing expenditures.

Some 51 percent, though, said they plan to use social media in their plans—a staggering jump from two years ago, when only 5 percent did so.

Retailers are especially fond of Facebook—with 76 percent focusing their efforts on the site. Fifty percent plan to use Twitter, while MySpace and YouTube both lagged far behind at 14 percent each.

“For us, the reaction has been great so far,” says Mark Crowley, a spokesperson for Staples. “It’s a nice channel for us to have discussions with customers. It gives us an insight into what they are thinking as well as a sense of their reaction to our specials. … We’re encouraged by the growth we’ve seen in both channels.”

Toys R Us took things a bit further than just giving customers a sneak peak at Black Friday deals. The company also used its Facebook page (which has over 400,000 fans) to distribute coupons, announce unadvertised deals and solicit feedback on what customers would like to see on sale during Cyber Monday. (Fans were able to vote on the deals they most wanted—with the most popular making it onto the company’s Web site.)

Followers of retail stores on social media say the Toys R Us formula is likely to become the standard for companies in the years to come.

“This is an interactive medium, not a broadcast one,” says Jenn Deering Davis, chief of community experience at Appozite (the parent company of CheapTweet.com).

Consumer Nation Holiday Central Edition
Consumer Nation Holiday Central Edition

Many retailers already offer incentives for customers to become fans or followers. Outback Steakhouse offered a coupon for a free Bloomin’ Onion appetizer to new Facebook followers, while Toys R Us offered new Facebook fans a $5 coupon.

It’s not unlike the model grocery stores offer, where frequent shoppers are eligible for additional discounts.

Part of the problem with marketing on social networking sites is standing out from the growing crowd. With so many major retailers using social media to market their specials, consumers could become wary of becoming fans or followers—as the flood of sale announcements could drown out updates from their real-life friends.

That’s why deal consolidation sites, such as CheapTweet, continue to thrive. On Black Friday alone, the site sifted through 40,000 deals people were tweeting about.

“People don’t want to follow 50 different Twitter accounts of retailers,” says Davis. “You have to really, really like a company to follow them on Twitter.”

While Facebook and Twitter might help get the word out to customers about deals, they’re just a piece of the puzzle. Ultimately, bargain hunters are still looking for truly substantial savings before they hand over their dollars.

“I became a fan of Newegg.com and saw their [Cyber Monday] list that way,” says Sean Martin, a consumer who lives in the Dallas, TX area. “But nothing struck me as an amazing deal that I couldn’t resist.”

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