Now, private label is social.

As social networking sites have captured the attention and imagination of consumers and corporations, store brand marketers can’t stand idly by. Consider the trends:

• Facebook reached 200 million users in 2009. According to the site’s January 2009 Social Ads platform, the 35-54 year old demographic not only grew fastest, but accelerated to a 276.4% growth rate over the past six months, doubling every two months!
• More businesses are adopting social media to reach customers. Forrester’s April 2009 Marketing Forum predicted that U.S. companies would boost social media spending from $716 million in 2009 to at least $3.1 billion in 2014–an annual increase of 34%.
• More B2B companies plan to use social media for marketing and PR purposes. According to research firm eMarketer, U.S. advertisers will raise B2B social media spending from $40 million in 2008 to $210 million in 2012.

Savvy players such as Target, Kroger, and Meijer, among others, have experimented with various forms of social networking to enhance the reputation of their stores, guest experiences, and product selection including, in the case of the latter two, their private label brands. Sites offer customers the opportunity to connect with each other, write product reviews or exchange product recommendations. Given the hype that surrounds the subject, MVP took a closer look to see whether these efforts are living up to expectations. And the results may surprise you.

Social Networking 101

Social networking can be described as the synthesis of technologies that enable individuals to communicate easily, exchange information, and join or form online communities. Many of us are familiar with such well-known and highly popular social media services as Facebook, Twitter, MySpace, and YouTube. Clearly, these sites, which focus primarily on collaboration rather than commerce, are more about content than creativity, at least from the brand marketer’s perspective. And with runaway success stories from retailers like Target (over half a million Facebook followers), how could one dispute their value?

“White Label” Sites

However, for those in need of a richer Web 2.0 experience and higher degree of brand customization, so called “White Label” software solutions from over 100 vendors dot the social media landscape. Such platforms allow you to create a social networking site similar to Facebook or MySpace on your own Web site with an experience and look that vary in the degree of customization, depending upon the software provider.

White Label sites are especially appealing to those marketers seeking to offer consumers richer user generated content (blog, specialty forums, photos, polls, etc.) opportunities than social media service sites like Face-book and Twitter typically allow. For example, Meijer’s site (www.meijerbrand.com), a representative of this genre, had as of presstime 816 users who have contributed to 209 threads and 214 posts on topics relating to the superstore’s Meijer Brand, Meijer Gold, and Meijer Organic products.
White Label applications from such prominent vendors as Kick-Apps!, Crowd Factory, and Ektron offer enterprises the ability to create branded customer communities and employ social networks for the purpose of, in the words of Jive Software, “enabling companies to connect to and capitalize on the intellectual and creative content of employee and customer conversations.”

Store Brand Merchandising Intersect

But the real question is not what social networking is, but what it does for retailers in general and own brand advocates in particular. Store brands account for one out of every five items sold in U.S. supermarkets, drug chains, and mass merchandisers. Store brands also represent more than $65 billion in sales, according to the Private Label Manufacturers Association. Couple this with an Ipsos-Mori nationwide study revealing that four in 10 consumers define themselves as “frequent” store brand shoppers, and one would assume that store brand retailers would want to aggressively exploit social networking to capitalize on this positive trend. As John Lewis, president of the North American division of Nielsen, says: “The continued proliferation of media enables tighter targeting and more efficient outreach. Manufacturers should embrace social media and new technologies, ensuring that the distribution of advertising across the “three screens” (TV, Mobile, and Internet) is split correctly.”

The view from the North Country, with Target, SUPERVALU, and Nash Finch in our own Minneapolis backyard, is that only a limited number of leading retailers and wholesalers are tapping into social networking to encourage meaningful customer and team-based relationships. We find that the real value of social networking cannot be achieved through fragmented efforts. A Facebook page here, a Twitter feed there, just won’t cut it. Rather, getting serious about social networking requires an assessment of core merchandising programs and product offerings whether for the store as a whole or for the “own brand” in particular. Once sorted out, the next step is to identify how social networking can enhance and communicate a store brand value proposition. Finally, social networking communities can’t exist without management support. Content contribution, moderation, measurement, and optimization are all essential to successful community development. This overview discusses the options for private label marketers to boost social media effectiveness and measure its ROI.

Our social media survey, undertaken at the suggestion of Exclusive Brands magazine, revealed that Target, Publix, Wegman’s, and Safeway lead the pack in terms of Facebook followers (See Chart below). Target had a commanding lead with an astounding 550,000 Facebook fans compared to its closest runner up, Publix, at 71,345. What accounts for Target’s success, and what can the rest of the industry learn from it?

Social Media is SOP at Target

According to Sarah Boehle, Target spokesperson, “we have been leveraging social media outlets to reach the public for the past few years, and we routinely integrate social media tactics into a variety of our marketing campaigns, including Back-to-College, Target Ten, and Style and Entertainment, in order to promote our designer/musician partnerships. We also continually explore ways to get our guests more involved, such as asking them to vote for their favorite charity in our Bullseye Gives campaign or to provide us with feedback on our product selection through Facebook updates. In addition, our leaders currently blog internally as a way to communicate with team members.” (Read more about Target’s high-profile use of social media in the interview “Target Sets its Sights on Social Media Success” on the Exclusive Brands Web site: www.pl-eb.com/pleb022.htm)

We can summarize Target’s search for social synergy as follows:

• Social Media for One and All: Target routinely leverages social media outlets to reach the public and incorporates social media tactics into marketing campaigns where more social savvy guests can respond. Since this includes philanthropy (e.g., Bullseye Gives), we believe this is not intentionally restricted to a younger age demo, but rather anyone who is familiar with the popular 2.0 social media services. Internally, the company’s leaders blog to communicate with team members.
• Facebook Smiles on Target: On Facebook for over two years, this social media service connects Target to more than 500,000 fans. The service seems more oriented to hard lines rather than food at present. For example, updates about a new and exclusive Prince CD, Back-to-College contest, and G.I. Joe product launch. Target engages guests by asking for feedback through status updates. For example, “Target wants to hear what you think about our guys’ clothing selection. What is your favorite thing to buy at Target?” Receiving approximately 1,200 responses in less than a week and opening itself up to comments from fans has provided Target with valuable feedback on its men’s apparel assortment. This feedback will likely lead to changes in merchandising selection.
• Social Networking for Social Responsibility: When it comes to corporate giving, Target stepped up to the plate on May 10, 2009, when it launched Bullseye Gives. Here Facebook members could vote for the charity of their choice. Nominees received a portion of a $3 million donation (which is equivalent to one week of Target’s corporate giving). The program was open to all U.S. Facebook users, and generated more than 291,000 votes from 167,000 individuals. The percentage of votes per charitable organization correlated with each charity’s portion of the $3 million donation. Does such corporate giving pay off? During the campaign, Target gained approximately 100,000 Facebook fans (an increase of nearly 50%) and received more than 3,000 wall posts on its Facebook page.
• Twitter Joins the Team: In June 2009, Target Government Affairs created the Twitter page “TargetTwitizen.” The purpose is to immerse team members and the general public in the civic arena and foster community interaction by providing brief notifications about community engagement opportunities, interesting media stories, and information regarding Target’s involvement with civic activities.
• YouTube, Your Way: YouTube is another social media arrow in Target’s quiver. In fact, it has a dedicated channel (www.youtube.com/target), where guests can view recent commercials and online-only Target videos. While its subscribers had over 81,627 views, the channel is limited to 500 dedicated followers.
• School Ties: Target’s Back-to-School/Back-to-College 2009 promotion had a heavy online media commitment as in past years. But this time around, Target partnered with social media sites, including Facebook, MySpace, and AOL, to create a customized Back-to-College user experience. Not only was the campaign fun and entertaining, but it also helped students to prepare for the back-to-school season with the latest product trends.
• Something New on the Way to the Forum: New leader blogs for 2009 enable Target execs to use internal blogs to share information with team members and offer perspective and commentary. To date, this communication forum has been well received by team members.
• First We’ll Meet, Then We’ll Talk: Target’s premise is to reach guests and encourage interaction with the brand. Target views social media as an opportunity to reach the public and communicate in ways that truly resonate with guests. And gathering relevant guest feedback can enhance the retailer’s products and services.
• What’s Up with Store Brands? No owned-brand Target online community currently exists. However, we suspect that this is not off the table, given Target’s choice of the word “currently.”
• Many Happy Returns: Measuring Social Media Success and calculating ROI varies for each initiative, depending on company goals and social media campaign, e.g., “Bullseye Gives” had very different ROI criteria than product specific or team engagement social media efforts. Target reported demonstrated increases in Facebook comments and fans for a number of its philanthropic initiatives as evidence of its success.

According to the Target’s Boehle, “social networking is the future,” as Target is “always exploring new and innovative ways to reach guests and have them interact with its brand.” She continues, “Target views social media as another conduit to reach its key audiences and gather insightful feedback that helps the company remain relevant to its guests.”

Social Networking Store Check

Given strong public store brand sentiment, our survey (Chart 1 on page 20) reveals that a number of other leading retailers are also experimenting with the depth and breadth of their social networking commitments. For example:

• SUPERVALU’s Cub Foods retail division established a Twitter account over a year ago, but it has been inactive; there appears to be no social media effort behind such flagship own brands as Culinary Circle™ (premium restaurant-quality products), Wild Harvest™ (natural and organic products), Baby Basics™ (infant and baby care products) and Homelife™ (non-grocery products).
• Nash Finch promotes the veteran Our Family brand through a connection to the Shoppe Simple hub. Here consumers can browse recipes, subscribe to them in a Web reader feed, or share them with family and friends on Facebook and Twitter. While Shoppe Simple is not a true social network, it helps merchants grow their sales and profits through Transactional RSS (RSS, an acronym for Really Simple Syndication) is a Web feed, which is employed on many social networking sites.
• Wegmans has active Twitter and Facebook accounts, which are primarily used for customer feedback and do not promote Wegmans brand products.
• HEB’s Central Market retail division has Twitter and Facebook accounts, as well as a blog on their main website. Blogs represent an entry-level form of social networking, because they enable customer feedback.
• Kroger claims, according to a March 10, 2009 Marketing Daily news brief, that consumers love its private-label brands; its own brand offerings have fueled a 3.8% increase in same-store sales in its fourth quarter and 5% for the full year. This Cincinnati-based retailer gets social though a Twitter account called KrogerDeals, which it uses to announce in-store deals, and a Facebook page which is exclusively devoted to similar promotions for private label products. The company has a corporate Twitter account, too; but this appears dormant.

Wal-Mart Socializes & Listens

• Wal-Mart has experimented with multiple social networking flavors and variants for multiple objectives. Its efforts range from a team of Tweeters who ‘tweet’ about products and events, e.g., music, deals, community involvement, and general customer relations to a Facebook page that focuses almost exclusively on customer relations. Like their rival Target, Wal-Mart uses YouTube to promote commercials and store-related videos, and boasts over 17 million channel views and 1,500 subscribers. While this retail giant tried to create its own version of a MySpace and a Flickr site with apparently limited results, its most novel use of store brand social media may involve the art of listening. With recognition that consumer insight will inform private label marketing decision-making and garner customer favor, Wal-Mart is creating a shopper’s Great Value Round Table. While a promotional research site rather than social community, participating shoppers will receive more than a penny for their thoughts–in fact, eligibility to win a $500 Walmart gift card. (New York City-based GfK Custom Research North America is Wal-Mart’s research partner on this project.) The project will allegedly begin with 200 members but the blogosphere reports that this may grow to 20,000 by year’s end.
• Publix has delved into social networking through a Facebook page that is used for customer relations and little else.
• Safeway has a low-key presence consisting of a Facebook page used for customer relations and a YouTube channel with a video about the company as well as commercials. Again, there’s no evidence that the chain is using social media to promote its product assortment, including private label.

What Value to Store Brand Marketers?

According to the Ipsos-Mori study, seven out of 10 shoppers believe that the private label products they buy are as good, or better, than their national band counterparts. Additionally, store brand products offer consumers exceptional value as they are priced 15 to 20% below national brands. Positioned for success, private label retailers, wholesalers, and manufacturers would be well advised to engage in a social media marketing efforts in which strategy, design, moderation, and measurement are part and parcel of the medium’s recipe for success, as no one wants to be associated with a half-baked effort. From a retailer’s perspective, opportunities abound to create community networks around any number of topics: health and nutrition, organics, the environment, food preparation and safety, cooking tips, and more. Add retailer sub-brands, customer loyalty programs, and community relations into the mix and it’s time to think and act social.

Social networking sites, unlike other marketing communications tools, not only enable consumers to gather and disseminate information but also to connect with fellow shoppers and store advocates as well. Once they become associated, site members can interact with one another and spontaneously form communities of shared interest, which can stimulate product demand and enrich in-store experience.

It’s Time to Join in the Game

As legendary communication theorist Marshall (“The Medium is the Message”) McLuhan put it, “When cultures change, so do games.” Given the rise of sites like Facebook, in which more than 10 million users become fans each day, society is both playing the social networking game-and making up the rules. This popular groundswell phenomenon can give a new and positive voice to store brand shoppers. After all, dialog about your company, products and in-store experience occurs regardless of your presence. Whether you take advantage of one of the popular social media service-based sites like Facebook or Twitter or create a customized White Label community of your own, social networking is changing the conversation from “here’s what we have to offer” to “what it is it that you want and why do you want it?”

As social networking sites proliferate, retailers can no longer rely solely on traditional media (print, radio, TV,) or packaging, to communicate their value propositions. Rather, with an integrated “three screens” approach (TV, Mobile, and Web site, including social networking) organizations will find that they have shifted from an interruption model to a conversational one. By capturing shopper enthusiasm–and ultimately data–for social networking communities, marketers of all stripes can identify their most influential consumers, encourage participation in new product development and merchandising ideas, and improve overall brand attitude, awareness, and intent to purchase. While some store brand players may still question whether the time is right to engage in social networking, un-monitored online conversations are transpiring about them right now. As many of the companies that we’ve observed have discovered, getting in on the conversation means the ball is in your court–and the next move is yours. Ultimately, social networking should be viewed as a channel that private label marketers need to embrace and act upon. EB
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Dick Weinrib (info@mvpdesign.com) is President and CEO of MVP Marketing + Design, Inc. (and MVP Social Networking) a Minneapolis-based marketing communications and design firm serving the private label industry.