Benefits of New Media Are Increasingly Measurable

OK, so the bulk of your shoppers don't even use your website or Twitter page. Your conclusion is that investing a lot of effort in electronic media isn't worth it now because it won't provide a significant payoff in sales or cost-savings.

You may be right, depending on how you define significant payoff. Most retailers active in new media can provide anecdotal evidence about how a promotion via a website, social networking site or mobile device led to a rush of interest.

However, if you're looking for proof that X percent of store purchases are tied in some way to consumer new media activity — such as shoppers following you on Twitter or researching your offers online — then you have a more difficult task ahead. But short of that kind of conclusive data, there's increasingly compelling evidence about the benefits of reaching out to your audiences online:

• There's a correlation between social media initiatives and company financial performance, according to a multi-industry study by Wetpaint and the Altimeter Group. Companies with the highest levels of social media activity advanced revenues by 18% over the past 12 months, vs. the least active, which posted declines of 6% on average, found the study.

• There's a correlation between social media sites and supermarkets' most coveted customers: women with children. Those customers are far more likely to use Facebook, MySpace and Twitter than others, according to a survey by Retail Advertising and Marketing Association conducted by BIGresearch.

• There's also a linkage between use of grocery websites and growth in shopper spending. A study by Grocery Shopping Network that looked at households with similar spending patterns found that by far the biggest spending increases came from households which were registered grocery website users.

This issue of SN focuses on new media, with stories in all sections about the impact on food retailing. For example, one story provides a look at notable retailer website efforts, while another delves into retailer successes with social networking sites.

While much of the new media focus is on building sales, there are increasingly implications for cost savings. Companies are using new media as a tool for promotions and soliciting feedback from customers. Retailers can do the math themselves to figure out how much money this could save over traditional advertising or customer research methods, assuming you could even achieve the same kind of customer connections using conventional means.

New initiatives are not without risks. A story this week outlines how Marsh Supermarkets upset some consumers when it pulled a coupon promotion from its Facebook page after discovering unauthorized copying and distribution. It's too bad Marsh encountered this problem, but it could happen to any company and should be viewed as a learning experience.

There are no guarantees that new media efforts will succeed for any single company. Much of it rests on how well it's executed and how Web-savvy the customer base is. For now, it's a classic game of trial and error. Companies that wait too long will be playing catch-up when the payoffs are bigger and even more quantifiable.

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