As far as the enterprise is concerned, the Internet can be segmented into two verticals: Business-to-Consumer (B2C) and Business-to-Business (B2B). For B2C applications, portals and search represent traditional means of engaging with the audience. From this perspective, it is easy to see why Forrester research and GSI Commerce have arrived at the conclusion that social media adds no value to online retail. Mashable recently wrote an article discussing these findings.

If you recognize the emergence of social media as a core pillar of the Internet and view it as a new frontier, the perspective is quite different. In the Business-to-Friends (B2F) universe, the enterprise is a friend of the consumer and sends relevant updates based on the consumer’s expressed interest. In the case of retail, relevance would be something that I am shopping around for at this time. Nothing has changed in terms of user behavior. It is still a question of user intent. The study correctly points out that a consumer is unlikely to purchase something merely on recommendation from a friend. The use case is obvious: While Mike is looking for a plasma flat screen TV, Joe is looking for something else. No match. Consequently, the study finds that only 2% of transactions originate from a social network such as Facebook.

Besides the user intent issue, there are a few other reasons for this number:

• The lack of an email marketing solution for social media - One could argue that the Facebook Fan Page could be used as an email marketing tool, pushing promotions to users’ news feeds. The problem is that the news feed is very personal and noisy. If the promotions are not targeted, they will simply get lost, resulting in poor revisit rates and conversion.
• Users shop around and consider recommendations before buying – This user behavior also impacts the seemingly low referral rates. Users may very well be getting recommendations from their social network and then go to a search engine to find the product they are looking for. While the social network played a key role, there is no traceable data to prove it.

IngBoo offers a Business-To-Friends (B2F) solution that extends the retail floor space to Facebook and Twitter using personalized social promotions. Our data speaks for itself. We deliver view rates in the 40%-50% rate and click-backs of 12%. These are pretty phenomenal results, opposite of findings in the study.

Social media marketing remains in its infancy. Comparing proactive marketing means, such as email marketing and search advertising, with the net referral traffic from social networks is like comparing apples to oranges. As it currently stands, it would have been better to compare portal banner ads with banner ads in Facebook. On the other hand, you were to be compare email marketing to a solution, such as IngBoo, you would arrive at a very different conclusion.