I had an interesting meeting with a UK bank last week, involved in processing online payments for major brands. With a vested interest in what they call the ‘exchange of value online’, they’re interested in getting their heads around how social media is changing the online shopping experience. The sharpest banks already see how a social shopping experience, where groups of friends & extended communities use social environments like Facebook to share & recommend products, has the potential to fragment the online shopping & payment process.
Facebook walled garden?
As Facebook develops further towards the kind of walled garden Yahoo & MSN always wanted to be, the brands in your life can come to you & your friends inside Facebook. Almost all major high street brands have some kind of presence on Facebook, & the most forward thinking have started to replace, or at least augment, their brand owned product sites with product content on their Facebook pages, & in some cases a full social commerce (s-Commerce) purchase process. As a Facebook user it’s possible to experience your favourite brands, see which of the people inside your network are into the same things, get reviews & recommendations from your peer group, shop for & buy products without the need to leave Facebook.
Social Media Data
Facebooks power here is largely consumer data. Ever since Lester Wunderman invented direct marketing in the 50’s we’ve been searching for ever more devious ways to target marketing messages to consumers, & social CRM (sCRM) is based on the same principle – the more you know about consumers the better chance you have of targeting them with products they’ll actually be interested in buying, & of course the more of this data you own the more power you have over the brands that need to do the selling. Just as the Supermarkets are the gatekeepers to the consumer in the physical world, does Facebook have the potential to do the same thing online?
What makes this model even more interesting is Facebooks virtual currency. Facebook Credits have been around for a while as a way to buy flying carpets or unicorns from Farmville without it feeling like you’re wasting any real money (lets just say it’s not a good idea to give your daughter your credit card details!). As Facebook partners with retailers to allow their Credits to purchase real goods & services the whole dynamic of the ‘exchange of value online’ shifts further. If Facebook Credits take on a real world value, one that cuts across international boarders, currencies & exchange rates, can we see a future where Facebook Credits are traded on the stock exchange, where the strength of global currencies are measured against the FC!?
Smartphones: Apple, Google & Microsoft
Google sees this potential too & has linked bonuses for all employees to the success of its own social strategy. Google +1 has the potential to capture data on what you like to wear, drink, eat or drive, & Googles Android smart phone OS provides an important link between the physical & virtual shopping experience. Smartphones play a key role, allowing people to stay connected to the web & each other through their social networks while they physically shop, & for marketers to push location targeted offers, fragmenting the traditional shopping mall experience further still. Applications like Facebook Places also allow Facebook to deliver value to retailers through peer recommendation & targeted offers driving traffic to offline stores.
Then there’s Apple, who’re already busy going it alone as usual developing a bespoke payment platform for iPhone. Unlike any of the other players Apple already has in iTunes what could behave like a bank account for millions of its customers. In theory iTunes could shift from ‘exchanging value’ for low cost music & video content to just about anything at any value, just like Facebook Credits. Then there’s Microsoft, past masters at the walled garden approach, with their Windows Smartphone making steady progress into the marketplace.
As the high street battle for smartphone turf hots up, market share is as much about bridging the physical & virtual shopping experience & so taking a slice of the ‘exchange of value’ tied up in ever more complex ecommerce & social commerce models.
A role for the banks?
Back to my original point about the banks. As an old world expert in processing payments, where do you look for your next alliance? The Smartphone OS providers like Google or Microsoft, SIM Card providers like 02 or Orange, the brands who actually have the product to sell, or Google & Facebook who control access to so many consumers online as well as the data about what they like & don’t like? There’s a lot of jostling for position across search, social media & mobile market share before the answer becomes clear, but one thing seems certain Facebook has become a lot more than just a tool for Mark Zuckerburg to meet women!