2017 Millennials

Millennials and Social Commerce: 

Engagement Leads To Sales But Paid Social May Not

Nora Ganim Barnes, Ph.D.

Chancellor Professor/Director

Center for Marketing Research

University of Massachusetts Dartmouth

nbarnes@umassdedu

Shannen Pavao

MBA Candidate

University of Massachusetts Dartmouth

Spavao2@umassd.edu

 

Introduction

Social Commerce is a term that describes the intersection of e-commerce and social networking sites and has changed the face of business as we know it. Social commerce refers to electronic commerce that uses social networks to assist in the buying and selling of products. Social commerce utilizes user ratings, referrals, online communities and social advertising to facilitate online shopping. Millennials, those that are between 17-34 years old, have been quick to adopt and utilize social commerce. According to Forbes there are 80 million Millennials in the United States and they spend more than $200 billion annually. This makes Millennials an attractive segment for marketers.

This influence that Millennials have on commerce is causing companies to focus their approach on the online buying habits of Millennials. According to a study done by Deloitte, younger adult consumers are heavier users of digital than older generations. Forty-seven percent of all Millennial consumers use social media during their shopping journey, compared to 19% of non-Millennials. Similarly, 37% of Millennial consumers spend more due to their use of digital, versus only 23% of non-Millennials. Nineteen percent of Millennial shoppers purchase their shopping basket items online and use in-store pick-up, compared to 12% of non-Millennials.

In September 2014, ShareThis released one of the first studies focusing on Millennials and social commerce, gathering data by observing online browsing and social patterns of Millennials. They conclude that for these young consumers, interactivity and discussion are central to purchase decisions. The study did not report on behaviors for any specific platforms and reported findings only in relation to the non-Millennial population, for example saying Millennials are “3x more likely” to behave in a certain way.

This study, conducted by the Center for Marketing Research (CMR) at the University of Massachusetts Dartmouth, is an in-depth look at current purchasing habits of Millennials using three of the most mature social networking platforms involved in social commerce (Facebook, Twitter and Pinterest). In this iteration of the study, Instagram was included due to its rapid rise in popularity among Millennials to explore its viability as a social commerce site. This is the fourth study conducted by CMR on the topic of Millennials and social commerce. The others were conducted in 2013, 2014, and 2016. The changes over time will be noted.

In an effort to discern what turns a like, follow or pin into a sale, this study, like the previous studies, explores and analyzes lead conversion tactics as identified by Millennials themselves. Also included is a look at mobile technology and its changing role in online purchasing. The potential for “buy” buttons is explored along with specifics on what products Millennials are buying from popular platforms. Millennials also report their likelihood to purchase from targeted, paid advertisements and their preferred channels for final purchases.

 

Highlights

  • Likes, follows and pins are significantly related to subsequent purchases on the platform.  This makes brand involvement central to the sales effort on social networking sites.
  • Even though Instagram is not yet an active social commerce site, 40% of Millennials follow companies/brands on the site.  Great potential exists for buying products on Instagram.
  • While companies move to increase their paid social initiatives, data is now available to indicate that 71% of Millennials are not likely to buy from targeted, paid advertisement that comes in their social network feed.
  • Eighty-five percent of Millennials on Facebook and 80% of those on Twitter state the top motivator for liking or following a company/brand is to support the company/brand they like. Pinterest users are motivated to share interests/lifestyle ideas with others.
  • Millennials are more likely to be converted to a sale if a coupon or discount is offered on a social networking site.

 

Methodology

This study was conducted via a comprehensive survey available in both digital and physical form for distribution. Qualification for participation required the respondent to be a member of the Millennial generation, using the popular demographic for this group of having been born between 1980-2000.  The survey was hosted online and the URL was shared by channels including, but not limited to, email, Facebook, Twitter and LinkedIn.  All data was collected during the Spring of 2017.  A total of 300 surveys provide the basis for this report.

In an effort to identify the link between online interest and related purchases, respondents were asked detailed questions about their social media use.  The survey was divided into sections on the popular platforms Facebook, Twitter and Pinterest which have been experimenting with allowing direct purchases from their sites. Respondents were first asked if they currently follow any companies or brands on that platform.  If they did not, or indicated they did not have an account on that site, respondents were instructed to move to the next set of questions on another platform.

For those that did qualify, questions were asked relating to respondents’ motivations for following a company online and if they ever made a purchase resulting from their online experience.  Respondents were asked to classify their purchases by platform and product category.  Millennials were also asked to indicate what a company would have to do in order to convert their like/follow/pin into a sale. 

In 2014 both Facebook and Twitter announced they would add “buy” buttons to facilitate purchasing directly on their platforms.  Several studies conducted since then by the University of MA Dartmouth showed a cool response from Millennials to the new idea.  In January of 2017 TechCrunch confirmed an eight month long rumor that Twitter would phase out plans for a “buy” button.  Facebook has continued with its introduction of “buy” buttons using Spotify’s e-commerce website building for merchants wanting to sell online though Facebook.  Spotify’s Facebook “buy” button is still in beta testing available only to US based Spotify users.

While this study focuses on Millennial online behavior from liking, following and pinning companies/brands to making purchases (online or offline), we continue to inquire about the interest in “buy” buttons on Facebook, Twitter and Pinterest (which has experienced success with their buyable pins). Findings on this issue will be compared with interest levels in previous years.

The 300 respondents in this study are diverse.  They represent 37 US states, the District of Columbia and 50 people (17%) from twenty-two countries outside the US.  The respondents are 41% male and 59% female.  The youngest Millennials, those 17-20 years old, make up 27% of this study, 35% are between 21-23 years old, 15% are between 24-26 years old, 13% are 27-29 and 10% are 30-34.

 

Findings

1a. Online Liking, Following and Pinning

When it comes to purchasing on social networking sites, Facebook and Pinterest resonate more than Twitter with Millennials. Facebook has more than 1.94 billion active users, far surpassing its social commerce competitors. Twitter usage has declined over the past several years but the company still boasts 328 million active users and Pinterest has surged to 150 million users. Additionally, Instagram has a 200 million active users. Study participants were asked if they like, follow or pin any companies or brands on these social networking sites.

For purposes of this study, the four platforms involved are Facebook, Twitter, Pinterest, and Instagram to a lesser degree. Facebook is the most popular Millennial platform for businesses with 56% of Millennials liking companies/brands on that site, followed by Instagram at 40%, Twitter at 17% and Pinterest at 14%.  

Following companies/brands on Facebook has decreased 7% since 2016, 2% on Twitter and 5% on Pinterest among Millennial users. These changes are within the margin of error for this study but the decline in following companies/brands on Twitter is now in it’s third year.  It is important to note that the number of active Pinterest users has increased 50%, surging from 100 million active users in 2016 to 150 million active users currently. More than 65 million businesses now have pages on Facebook making it a popular place to like a brand or company. Instagram was added to this study since it is very popular with Millennials and it does allow users to follow companies/brands. However, at this point it is not a social commerce platform.

Figure 1:  Following Companies/Brands 2013-2017

 

1b.  Companies/brands most “liked” by Millennials on Facebook

All respondents that stated they  liked or followed companies/brands were asked to identify their top 5 favorites on Facebook and Twitter.

These results are somewhat similar to the results in previous years. Nike remains in the top spot as the most “liked” company by Millennials on Facebook, while Adidas makes its first appearance in the study’s top 5, claiming spot #2. Target has lost traction, missing the cut in the top 5 this year, but is replaced with Amazon and Starbucks, which made the top 5 in previous years of this study.

Sephora, Disney, BuzzFeed and Victoria’s Secret made the top five list for the first time in 2016, but they did not make the top 5 in 2017.  Starbucks has not appeared in the top five since 2013, but has made a comeback jumping to spot #4, while Forever 21 did not make the 2017 list after two consecutive years in the top five in 2013 and 2014. 

Table 1:  Top 5 Companies/Brands Liked on Facebook by Millennials 2013-2017

2013

2014

2016

2017

Nike

Nike

Nike/Target

Nike

Apple

Apple

Sephora

Adidas

Target

Amazon

Disney

Apple

Starbucks

Target

Apple

Starbucks

Forever 21

Dunkin’ Donuts/

Forever 21

BuzzFeed/Victoria’s

Secret

Amazon

1c. Top five companies/brands most followed on Twitter by Millennials 2013-2017

Nike continues to hold the top spot for most followed brand on Twitter for the fourth consecutive time. As with the companies/brands most liked on Facebook, Adidas makes its first appearance in the top 5 most followed brands on Twitter in 2017, making a leap to position #2. Starbucks made its way back to the top 5 (4th in 2013), while GQ, Southwest Airlines, T-Mobile, and Under Armor make their first appearances in the top 5 since the study was originally conducted.

Table 2:  Top 5 Companies/Brands Followed on Twitter by Millennials 2013-2017

2013

2014

2016

2017

Nike

Nike

Nike

Nike

ESPN

Victoria’s Secret

Apple

Adidas

Starbucks

Dunkin’ Donuts

Dunkin’ Donuts

Starbucks

National Football League

Forever 21

BuzzFeed

GQ/Southwest

National Hockey League

Starbucks/Footlocker

Disney/Forever21/

Victoria’s Secret

T-Mobile/Under Armor


2. Motivators for Likes, Follows and Pins on Facebook, Twitter and Pinterest

When asking Facebook users why they like a company/brand, respondents said it is to support the brand they like, receive regular updates or get a coupon or discount. The top reasons why Twitter users follow a company/brand on Twitter are identical to those reported by Facebook users.

When asking Pinterest users why they pin something from a company/brand, “to research the brand when looking for a specific product/service” is the top reason followed by “sharing interests/lifestyle. The biggest difference between the three platforms is that Pinterest users are primarily motivated by their desire to share their interests/lifestyle with others.  They are less motivated by brand advertisements and more likely to research ideas than their Facebook and Twitter counterparts. This theme is consistent with the findings of our earlier studies on Facebook and Twitter outlets.

Table 3:  Motivation for Liking, Following or Pinning

 

Facebook

Twitter

Pinterest

To support the brand I like

85%

80%

57%

To get a coupon or discount

63%

59%

33%

To receive regular updates from brands I like

77%

80%

NA

To participate in contests

32%

53%

21%

To share my personal good experiences

24%

41%

41%

To share my interests/lifestyle with others

38%

49%

76%

To research brands when I was looking for specific products/services

56%

55%

81%

Seeing my friends already like/follow/have boards

41%

39%

52%

A brand advertisement on TV, online or in print led me to pin the brand

45%

41%

26%

Someone recommended that I like/follow/pin the brand

35%

43%

33%

Other

3%

8%

5%


3. Lead Conversion across Facebook, Twitter and Pinterest

Companies have long been trying to understand how to convert traffic to their social networking sites into sales.  Findings in this study indicate that cost is the prime motivation for buying among this group. Millennials in this study indicated that those companies offering coupons or discounts in exchange for a like/follow/pin would be more likely to see an increase in sales. Other popular responses included providing exclusive offers, free products, and motivating friends to recommend the product.

Companies have been shifting ad dollars to online, targeted, paid advertisements on social networking sites.  Millennials in this study were asked how likely they are to buy from targeted, paid advertisements that come in their social network feed.  Seventy-one percent reported they are unlikely to buy from these advertisements.

4. Purchasing After Liking, Following or Pinning

When it comes to social media purchasing, Facebook and Pinterest resonate with Millennials more than Twitter does.  Forty percent of respondents with Facebook accounts said they had purchased something online after liking or sharing it while 18% of Twitter users said they made a purchase after following or sharing the item.  For Pinterest users, 22% purchased something after pinning or sharing it.

The trade reports from Business Insider (The Rise of Social Commerce) and Vision Critical both report lower levels of purchasing after liking on Facebook and higher levels of purchasing after following or pinning a company/brand on Twitter and Pinterest than indicated in this study. Both reports used a convenience sample from the general population.

It is clear from our findings on Millennials, that they are more likely than the general population to actually make a purchase once they have some link to the company/brand through interaction on Facebook and less likely to make purchases on Twitter and Pinterest than a general population.

Table 4:  Comparison of Recent Studies on Purchasing After Liking/Following/Pinning*

Source of Study

Facebook

Twitter

Pinterest

University of MA

40%

18%

22%

Business Insider

28%

22%

23%

Vision Critical

33%

22%

40%

*The University of Massachusetts Dartmouth study focused solely on Millennials

The findings in this study show a statistically valid correlation between liking (Facebook), following (Twitter) and pinning (Pinterest) and purchasing from those platforms as a result of that engagement behavior.  Correlations are positive and in the moderate range for all three platforms studied.  There is value for companies/brands in building online communities, encouraging engagement, and enticing likes, follows and pins. When asked how those online purchases are made, Millennials report using laptop/desktop computers (63%) most  followed by 32% using smart phones and 5% using tablets.

 Table 5:  Correlations between Liking/Following/Pinning and Purchasing

 

Pearson’s Correlation (2 tail)

Significance

Facebook

.372

.000

Twitter

.581

.000

Pinterest

.490

.000


Figure 2:  Purchasing After Liking, Following and Pinning

 

5. Facebook, Twitter and Pinterest Purchases by Product Category

Of those purchases made after sharing something online, Millennials on Facebook and Pinterest prefer to buy goods in the category of Hair, Beauty and Apparel. This is the category where the bulk of likes and pins were converted into sales consistent with studies conducted in previous years. However, Tech/Electronic purchases after tweeting more than doubled since last year among Twitter users, accounting for 41% of purchases in 2017.  This is not surprising given the number of tech companies that have taken up residency on Twitter offering deeply discounted prices. On Facebook, Tech/Electronics was the second most social influenced purchase with 20% coming from this category. This is consistent with studies done in previous years.

On Twitter, the second most popular category in 2017 is Hair, Beauty, and Apparel (37%), dropping from last year’s number 1 category (56%) for tweets to sales conversions. Pinterest users are most likely to buy Art, Design, DIY, Photography and Craft products. These are the same results as studies conducted in previous years.

Users across all three platforms are unlikely to purchase in the category of Gardening & Décor.  More Tech & Electronics are purchased through Twitter and Facebook while more Art & Design, DIY, Photography and Crafts are purchased through Pinterest than through their competitor platforms. Those that selected “other” categories across platforms stated that they purchased baby items, pet supplies, books and entertainment (movies, music, event tickets, games, etc.).  These responses are consistent with the findings of previous studies.

Table 6:  Category of Purchases After Liking, Following and Pinning

 

Facebook

Twitter

Pinterest

Food and Drink

6%

7%

7%

Art, Design, DIY, Crafts, Photography

13%

7%

33%

Tech/Electronics

20%

41%

3%

Hair, Beauty, Apparel

50%

37%

43%

Gardening, Home Décor

0%

4%

7%

Other

1%

4%

3%


6. Millennials as Multi-Channel Shoppers

Respondents were asked if purchases were made solely online, only at a brick and mortar stores, or if both channels were utilized.   Seventy-six percent of those who buy after viewing an item on Facebook, report making the final purchase in some combination of online or in-store channels.  This is also true for 78% of Twitter users and 63% of Pinterest users.

Facebook influenced purchasing continues to occur both online and in-store with 76% (77% in 2016) reporting being multi-channel shoppers.  Twitter purchasing across channels is up 17%, while online only purchasing has dropped 13% since last year.  Some of these shoppers may be following and researching companies and products online then moving in-store to make the purchase.   Pinterest buyers are 9% more likely to make purchases using both online and in-store this year than they were last year.

Figure 3:  Where Purchases Are Made

 


7. Average Order Value By Platform

The amount of money spent through social networking sites by Millennials has not been effectively tracked. Monetate, a social media consulting company, reported data on average order by platform for the general population. They found that the average order value for Pinterest was the highest at $81, followed by Facebook at $71 and Twitter had a slightly lower average at $70.

Although this study focused solely on Millennials, it parallels the Monetate study in which the average order value on Pinterest led all social referrers, Facebook was second and Twitter third. Given that the University study focuses on Millennials, young consumers are spending less on average than their older counterparts.  

Forty percent of Millennials spent $20-$49 on Facebook, 33% spend that on Twitter, and 27% on Pinterest average that same amount. It is interesting to note that an additional 33% of Twitter users report spending $50-$74 for an average purchase, making Twitter purchases generally more expensive.  This is consistent with the report of purchasing more electronics through this site than the others. 

Table 7:  Spending by Price Category

Spending Category

Facebook

Twitter

Pinterest

Less than $20

21%

15%

37%

$20-$49

40%

33%

27%

$50-$74

17%

33%

23%

$75-$100

8%

4%

3%

Over $100

12%

15%

10%


8. Buy Buttons

The ultimate goal of a “buy” button is to keep users on the platform as they make purchases. In July 2014, Facebook announced the addition of a “buy” button to its advertisements. In July of 2015 Facebook expanded its “buy” buttons to include a “shop section” where selected merchants can sell their products directly through Facebook.

In 2014, just months after Facebook announced the addition of a “buy” button to their platform, Twitter and Pinterest quickly followed suit. In 2015 Twitter partnered with three large commerce platforms to increase the power of their “buy” button and Pinterest had more than 60 million buyable pins.

Facebook and Pinterest have continued to increase focus on “buy” buttons. (As stated earlier, Twitter has disbanded its e-commerce initiative involving “buy” buttons.)  Given the large number of Millennials with accounts on these platforms, it has been assumed that there is potential for enormous success but their popularity and profitability are still unclear. In this study we asked Millennial users of Facebook, Twitter and Pinterest how likely they would be to use “buy” buttons.  The findings continue to provide interesting information on this particular technology.

Pinterest users are the most likely to use “buy” buttons (or buyable pins) with 70% of respondents saying they would be very likely or somewhat likely to use them to make purchases. Facebook users were less likely to use “buy” buttons with 41% of Millennials stating they would be very likely or somewhat likely.  At this point in time, it appears that Twitter will not be pursuing “buy” buttons* and Facebook continues to test the technology.

*BuzzFeed News reports that Twitter has disbanded its 25 person commerce team and halted work on a “buy” button.


9.  Instagram

Forty percent of Millennials follow companies/brands on Instagram.  Those they follow are consistent with companies/brands followed (liked or pinned) on other platforms.  Nike continues its dominance when it comes to Millennial engagement.  It has been the number one most popular company across all platforms studied since the first iteration of this study in 2013. 

Table 8:  Top 5 Companies/Brands Followed on Instagram by Millennials 2017

2017

Nike

Adidas

Apple

BuzzFeed

Starbucks


The popularity of this platform and the willingness of Millennials to engage with companies/brands on the site, bodes well for the potential of e-commerce moving forward.

 

Conclusion

For Millennials, social networking is simply a normal part of daily life. It impacts where they go, what they do, what they buy and where they shop. There is evidence in this study that the companies/brands that they like (Facebook), follow (Twitter) and pin (Pinterest) is directly related to making purchases on social networking sites. This makes brand involvement central to the sales effort on social networking sites.  Marketers should focus on creating online communities, enticing likes, follows and pins, or encouraging other forms of engagement with this cohort and their favorite brands. 

Marketers should also look closely at the potential of Instagram for developing social commerce with Millennials.  Past experience with Facebook, Twitter and Pinterest might help to develop new strategies for this very popular and growing site. (Instagram launched in 2010)

It may be prudent to study metrics related to paid social initiatives.  Data in this study indicates that 71% of Millennials are not likely to buy from targeted, paid advertisements that appear in their social feed.  If these results are supported, marketers will need to consider alternative methods to capture the attention of this group.

While the introduction of “buy” buttons has been halted by Twitter and awaits full roll out by Facebook, Pinterest appears to have created a successful model.  “Buyable pins” on the site have proven to be very successful among Pinterest users.  They may serve as an example for marketers interested in pursuing onsite purchasing through a social networking platform.

Finally, Nike appears to have captured the hearts (likes, follows and pins) of Millennials.  Their social media plan serves as a best practice in business.  This research has found Nike to be the most liked, followed, pinned (and followed on Instagram) since the first iteration of this study in 2013.

It is important that businesses attempt to understand and target this generation of tech-savvy, connected, multi-channel shoppers. These Millennials are shaping the future of social influenced purchases and have the potential to explode over the next several years. In order to benefit from this, marketers will need to track, measure and study the relationship between a range of engagement initiatives and sales.

 

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