Going social

7 July 2011 Last updated at 10:08 GMT By Jane Wakefield Technology reporter Can the social experience of real shopping help improve web retail? Offline retailers have long held that online shopping will never replace a visit to the shops because sitting at a computer clicking on links is just not as much fun as hanging out at the mall.

But a quick glimpse at any high street with its rows of closed-down signs, pound shops and charity outlets suggest that consumers don't entirely agree.

Now a new phenomenon - dubbed social shopping - threatens to incorporate the missing social element in online shopping and possibly destroy even more bricks and mortar stores.

Social shopping encompasses a range of ideas, from shopping within social networks, to shopping-specific search engines that use friends recommendations to group buying sites such as Groupon.

Groupon harnesses the power of the crowd to bring people daily deals that they may not even have known they wanted - from manicures to mountain biking.

It has a very simple business model - people sign up for offers and once the required number of people are registered, the deal is confirmed and a voucher is sent to your inbox.

The firm has five million users in the UK alone, and is said to be the fastest growing company ever.

It puts much of its growth down to web-based recommendations - people see a deal and spread it among their online friends but not everyone is convinced by its social credentials.

"There are a lot of myths about how social Groupon is. In the beginning many deals may have been spread via social networks but now it is primarily through a daily e-+mail," said Forrester analyst Sucharita Mulpuru, who has recently authored a report on social shopping.

Word-of-mouth may have helped catapult Groupon into the limelight but its quarter of a billion dollar marketing spend probably played an even bigger role, thinks Ms Mulpuru.

Social store

As the world's largest social network Facebook is keen that people talk to retailers as well as their friends and it is trying to figure out how to make the most out of social shopping.

It boasts that half of the top 25 retailers use the site but the level of integration varies, from those who simply see it as a way to gain fans to "like" their brands to firms, such as clothing firm Asos, which are happy to allow users to make purchases from within the social network.

Asos is one of Facebook's biggest successes. It puts its full catalogue on the site and its fan page has 800,000 members.

Amazon uses the social network to offer product suggestions based on likes and favourites pulled from users' profile information.

Personalisation The Tweet Mirror invites your friends into the changing room

It has also introduced gift recommendations which let you know which of your friends have upcoming birthdays and suggests presents for them based on what they have shared with Amazon.

Ticketing firm TicketMaster offers anyone who has bought a ticket on its site the chance to share the purchase information with their Facebook friends. It claims to have increased its revenue as a result of this feature.

Meanwhile Levi's has what Facebook describes as a "social store front", offering users jeans that their friends may have liked and even using information to influence its supply chain. So if people in London are "liking" the skinny jeans most and people in Manchester are "liking" the bootcut style they can simply adjust their stock to match this.

And herein, for Ms Mulpuru, lies the real power of social shopping - as a tool for retailers.

"There is a ton of data that people share about themselves that the retailer can use to make more relevant offers. It is far more a personalisation tactic than about getting or retaining customers," she said.

Facebook's director of business development Christian Hernandez believes that Facebook can help users "connect to brands that they care about" and he reckons that among his Facebook friends there is plenty of chatter about shopping.

But Ms Mulpuru is not convinced it will become a shopping hub any time soon.

"TV didn't transform retail and neither will Facebook. At the end of the day no-one buys something as the result of a link. The truth is that large brands just have not experienced any sizable gains in direct sales from Facebook," she said.

"In spite of hundreds of thousands of developers having been given the opportunity to create useful shopping applications or to integrate commerce into Facebook, there has yet to be a blockbuster success," she added.

It hasn't stopped a raft of companies betting that social and shopping is a powerful combination.

Three former Yahoo executives have set up a dedicated social network aimed entirely at shoppers.

Dishwasher reviews?

Dubbed ChoozOn , the start-up is built entirely around shopping and personalised deals. It allows users to manage their various deals and discount services and upcoming apps for the iPhone and Android handsets will highlight nearby deals.

Users can sign up for loyalty programmes and if they share their shopping preferences and the brands and retailers they like best, the shops will fashion specific discounts for them.

Meanwhile UK start-up Shopow (Shopper Power) offers a shopping search engine that aggregates thousands of retailers and products across all areas of consumer goods. Like other price comparison sites it allow users to compare goods by criteria such as price, retailer, service and delivery, but it also integrates various social functions.

It will display reviews and deals that have already been collected around a product, as well as drawing in more personal views.

"Shopow is somewhere where you can interact with friends but also rate your recent purchases," explained co-founder Kevin Flood.

He thinks people are far more likely offer to useful feedback via such a site than on Facebook.

"While some deals are appropriate to share on Facebook, you wouldn't share your experiences with a dishwasher on there," he said.

The ability of retailers to engage directly with consumers is a very powerful one and some have taken bold steps in this direction.

In February, US fashion designer Derek Lam harnessed the power of the web when he asked eBayers to vote on which of 16 dresses should form his summer collection. More than 120,000 people voted and the five winners went on sale in May.

Not wanting to be left out, the high street too is embracing social media.

In March, London's largest shopping centre Westfield unveiled a tweet mirror that allowed shoppers to try on an outfit and share the image in real time with friends and followers on Twitter.

The mirror, brainchild of Dutch firm Nedap Retail, is already installed in dozens of shops in Belgium, France, Germany and Switzerland.

How many shoppers want to invite their online friends into the changing room is unclear but it offers a small glimpse of what offline retailers will have to do if it wants to persuade consumers away from their screens and back to the mall.

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Over-50s flock to social networks

27 June 2011 Last updated at 12:57 GMT Older users account for most of the growth on both Facebook and Twitter in the UK. Facebook use among over-50s in the UK has risen faster than any other group, according to research firm Nielsen.

Overall, membership of the social network grew 41% between 2009 and 2011. Among older users the figure was 84%.

The trend was similar for Twitter, although unlike Facebook, younger users appear to have drifted away.

Nielsen's findings contradict research published earlier this month that suggested the site's popularity was dwindling in the UK and USA.

The latest study was commissioned by the UK Online Measurement Company (UCOM), which is funded by advertisers and media agencies.

Its measurements are based on the behaviour of panel of internet users, both at home and in work.

The research found that, in May, 26.8 million people in the UK visited Facebook, propelling it past Microsoft's combined sites - MSN, Windows Live and Bing. Only Google was more popular, said Nielsen.

Twitter enjoyed a record month, reaching 6.14 million unique visitors - a 34% increase on the previous month. The number of women aged over 65 using the site grew by 96% over the same period.

Business network LinkedIn clocked-up 3.59 million unique UK visitors in May - 57% more than in April.

Continue reading the main story Rory Cellan-Jones Technology correspondent, BBC News

What Nielsen's data also shows is a big growth in the use of Facebook by the over-50s. That may be a double-edged sword - affluent older users will be attractive to advertisers, but if younger members decide they don't want their news feed cluttered up with their parents' news, they could begin to melt away.

For a business with a sky-high valuation, and planning a stock market debut next year, all of these figures are hugely significant.

Facebook is confident that it can reach the billion user milestone relatively quickly, as developing countries get more of their populations online.

But most of the revenue it needs to justify a $50bn dollar price tag will come from territories like the US or the UK - and any suggestion that Facebook users there are getting a little weary with the whole business could be disastrous.

Grey market If accurate, the growth among older users is likely to be welcomed by advertisers, keen to tap the wealthy demographic.

"The younger audience, under 25, monetize very badly," said Simon Spaull, chief development officer at advertising agency TBG Digital.

"They are there to waste time. Clients are more interested in return on investment and an audience they can monetize."

The idea of more older people on Facebook may spark fear among younger users, wary of mum and dad popping-up online.

But according to trends expert Dr Antonia Ward from The Future Laboratory, the broadening appeal is inevitable.

"It is a platform. As it becomes embedded in society it becomes more embedded across the general public."

"Something like Facebook has to have a very broad base of users or it does not work," she said.

That combination of established and edgy is seen as a virtue by many advertisers, said Sam Gadsby, head of social media at Clicky Media.

"LinkedIn is perfect for a business-to-business client, Twitter is an organic build.

"Facebook combines both and is definitely one of the more exciting ones because it could go viral," said Mr Gadsby.

Rise and fall

The popularity of social networking, and Facebook in particular has been a matter of some dispute in recent weeks.

One website, Inside Facebook, claimed that user numbers had fallen in the US, UK and Canada, despite growth elsewhere in the world.

Another piece of research carried out by Brilliant Media, based on Google Analytics data, appeared to confirm the Inside Facebook findings.

Facebook does not comment on statistics generated by third-party research.

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How can social networks make money?

Mobile "check-ins" increase advertising possibilities of social networks

With social networks now big business, what can the companies do to turn free services into hard cash?

Over the past month, US Facebook users have been enjoying a selection of Warner Bros blockbusters streamed through the site in exchange for about $4 (?2.45) in Facebook credits.

Facebook takes a 30% cut of each credit spent, much like Apple and its app store.

There are over 400 apps and games where the site's 500 million users can go on a social spending spree.

It is easy to see how money can be made - a valuation last month valued Facebook at around $50bn (?30.6bn)- more than Warner Bros and almost twice that of computer giant Dell.

Advertising is at the heart of most internet success stories. But in some ways social networks are uniquely engineered as money-making machines.

"Because you're creating the content and you're making up the content for free, all that social networking has to do is put the ads next to it," says Paul Lee, of Deloitte Research.

"There aren't the costs that say a newspaper would have in paying for the journalists to create the content and then serve the advertising next to it."

Rides at this theme park could only be accessed by checking in on Facebook

But crucially, cash is generated by clicks and views. Experience has shown if users do not get the experience they want, they just move on.

"There's been this pattern where it started with Friendster," says Jeffrey Mann, of technology research company Gartner.

"It more or less got replaced by MySpace. MySpace more or less got replaced by Facebook. The question is - will Facebook stay on top? So far they seem to have."

And reaching out to the real world is one way Facebook is trying to guarantee its longevity.

Social rollercoaster

UK theme park Alton Towers is holding an event where you are only allowed in if you let Facebook know you have arrived using its geo-location Deals service.

The promise of matching people with products makes social networks attractive to advertisers, and Facebook deals add location into the mix. Users check in on their mobiles and get special offers in return.

It is similar to Foursquare, another location-based network, which has recently partnered with American Express. Users check in at selected venues to receive cashback.

In many ways, this concept simply extends the notion of targeted advertising which has always existed online. And what you say in your profile gives advertisers something to aim for.

But before everyone starts checking in, there are some worries about exactly how these transactions work.

"You can target me as someone that's 38 years old in Wandsworth that likes football or you can target all the men in the UK that like football," says Stephen Haines, managing director of Facebook UK.

"You can go very broad or very narrow with your advertising."

To people who are not familiar with social networking, that could sound a bit frightening.

MySpace has been "more or less replaced by Facebook" in recent years

"I can sort of understand it," says Haines. "[but] I think if we're giving the user relevant advertising that's targeted towards them, they actually respond better to it [rather than] to the traditional sort of pushing advertising in their faces."

If entering into a public social pact with that product is too much for you, however, there is a workaround. If you change the "connecting on Facebook" settings you can keep your "Likes" - or recommendations - to yourself.

If you choose not to, then you are effectively engaging a uniquely powerful form of product endorsement to all your Facebook friends.

"When ads have social context in them, when you can see what your friends have already done with that brand or if I've liked Nike, that ad performs much better," says Haines.

"We would never give brands like Nike [details of] an individual person. What we would say is there's 10 million 18-24 year olds that have football in their interest."

And for all the hype surrounding online privacy, most people do not seem to be too worried as long as there are benefits.

US star Kim Kardashian reportedly gets $10,000 a tweet to advertise

"I think people are prepared to give up some of their data without too much effort and, in exchange for that, get a free service," says Lee.

"There are some who think that the amount of information giving out is far too much, but they are in the minority.

"There's is certainly legislation being proposed at the moment - at an EU level and also in the US and Canada - to make sure that there is the right balance between the amount of information given out and the extent to which it is made very obvious what information we are giving out".

'Firehose' future

One of the most notable social networks is now fielding 1,000 tweets per second.

Twitter was valued at around $8bn (?4.9bn) at a recent auction. Advertisers can buy promoted tweets or trends, but now the network has something else to shout about - a rich data set accumulated about us.

"Twitter licenses its complete feed - what they call the firehose," says Mann.

"Every message that gets sent out can be used by companies like Microsoft and Google to analyse trending topics and what people are talking about right now," he adds.

A company called Gnip licences percentages of that firehose to the rest of us. Just half of that firehose will cost you $360,000 (?220,321).

So what of the future? Well, those who've been studying it say it's just the beginning

"Probably the next phase of social commerce is about extracting commissions from products which are sold directly as a result of recommendations made," says Lee.

"So rather than selling advertising, what you're doing is taking a commission against a product sold.

"What we can be sure about in terms of social networks of all types, is that there will never only be one model which works for everyone."

Another thing we can be sure of is that not all of us will be happy to go along for the ride.

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