AN

Apparel WHITE PAPER

HOW SOCIAL MEDIA IS REVOLUTIONIZING THE APPAREL INDUSTRY ONE MESSAGE AT A TIME

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just a few short years, social media has revolutionized the way people communicate and share information, turning conversations into 140-word blips and making e-mailthe original electronic communication toolseem quaint. Now, social media is leaving its mark on commerce, and the apparel industry is no exception. Apparel brands and retailers that have invested time and resources into crafting a progressive social media strategy have been able to use the medium to further customer loyalty, raise brand awareness, spread advertising messages, create online communities, communicate directly with customers, and in many cases, drive sales. One of social medias biggest benefits is that it creates kinship between the brand and its customers and prospective customers. Kinship, in turn, drives purchase intent and word of mouth. In addition, social media can help apparel businesses put their best face forward to an increasingly informed and conscious consumer base. Customers today make more informed purchase decisions than they ever have before, and they care about who gets their dollars. Social media allows consumers to get a feel for the organization and the people that work for that organization in a way that other forms of marketing and communication dont, explains Jay Baer, blogger and founder of social media strategy consultancy Convince & Convert. Many apparel retailers and brands have still hesitated to jump on the Facebook/ Twitter/YouTube/MySpace/LinkedIn/blog bandwagon, but avoiding social media today is no longer an option, says Peter Sachse, Macys chief marketing officer and head of macys.com. If you are not in the social media space, you need to be there, Sachse told the audience at a recent fashion industry seminar in New York City. This conviction comes from the fact that social media sites such as Facebook, Twitter, YouTube, and others have given consumers the power to converse

freely and publicly about brands, which can impact brand perception and, ultimately, consumer spending. The customer controls the conversation now, so unless you decide to get into that conversation, theyre going to hold it without you, Sachse warned.

Why Is Now the Right Time for Social Media?

Growth and interest are high. A recent survey from eConsultancy shows that social networks and blogs are the fourth mostpopular activities online, (ahead of personal email, even) and that 10 percent of all time spent on the Internet is spent on social media sites. Statistics on the leading social networking sites are equally impressive: Facebook now lists more than 500 million users, with an estimated 500,000 new users signing up each day. In total, people spend more than 700 billion minutes per month on Facebook. On YouTube, users are watching 2 billion videos each day and uploading hundreds of thousands of videos daily, while Twitter is now attracting 190 million visitors per month and generating 65 million Tweets a day. All those users and all that time spent on social media provides apparel brands and retailers an unprecedented opportunity to promote their brands. Ad spending on social destinations in the United States will reach $1.7 billion this year and cross the $2 billion mark in 2011, according to eMarketers most recent forecast. And 31 percent of Apparel magazine subscribers indicated in Apparels Independent Audience Survey, July 2010, that marketing/advertising/social media was a top investment priority for 2011. Customers also seem to be along for the ride: According to a new ExcatTarget report, companies active on Twitter are reaching nearly 11.5 million U.S. consumers who use Twitter daily, and 5 percent of U.S. online consumers today follow at least one brand or company on Twitter.

COPYRIGHT EDGELL COMMUNICATIONS, INC. AND APPAREL 2010

Among 72 luxury brands (including Coach, Louis Vuitton, Hugo Boss and Ralph Lauren) surveyed for the second annual Digital IQ Index for Luxury, traffic to brand sites from Facebook more than doubled in 2010, growing from 3.4 percent to 7.1 percent. Seventy-three percent of these luxury brands listed Facebook as a top eight source of web traffic. Brand sites with social sharing recorded annual traffic growth of 42 percent vs. 18 percent for brands without social sharing, suggesting the increasing importance of social media optimization among these luxury brands. Social media influences consumers. Social media brings with it the power of users from all corners of the world. Today, anyone with an Internet connection has the ability to share their message and influence with a worldwide audience, says Andrea France, retail industry principal for SAP Retail. Bloggers and average consumers have become the go-to voices for advice on products, shows a recent Nielsen poll, which found that 89 percent of consumers say they trust peer reviews and ratings over company ads. Anyone not convinced of the influence social media holds for the apparel world need only look to the recent logo dustup endured by Gap on Twitter and Facebook. Just days after launching a new logo, the retail giant was forced to scrap it after thousands of customers posted on social media sites in support of the original logo Gap has had for more than 20 years. Marka Hansen, president of Gap Brand North America, admitted in a statement that the company did not go about this in the right way and missed the opportunity to engage with the online community. The right demographics. Social media has proven popular with the demographics that apparel marketers crave both for now and for the future. Data from Forrester Research shows that two-thirds of Facebooks users are of post-college age, with 35-plus being

the fastest-growing demographic, while Twitter lists 42 percent of its users in the 35to-49 age range, and 20 percent ages 25 to 34. A recent analysis from website monitoring service Pingdom shows that 25 percent of users on 19 of the most popular social networking sites are aged 35 to 44. In addition, companies that perfect their social media strategies now will be well positioned to capitalize on the next wave of consumers. While many current customers are not yet social media advocates, the next generation of apparel consumers that will soon enter the disposable income demographic will be fully comfortable on the social web. So, marketers have to be there, says Allen Johnson, a research director with Gartner.

How Are Apparel Companies Using Social Media?

Apparel businesses that decide to take the leap into social media will find themselves in good company. Established brands including Nine West, Kohls, Macys, Nike, American Apparel, LOFT and many others have a robust social media presence, using Facebook, Twitter, company blogs and other sites to offer social media-only discount campaigns and limited-time product offers, as well as post behind-the-scenes content such as fashion shoots and runway videos. High-end brands are getting into the game as well, using social media to affect a sea change in the way luxury brands communicate with customers, France explains. Once the province only of the fashion elite, runway shows are now being broadcast online to a live global audience. This year, more than 20 labels, including Marc Jacobs, Calvin Klein, Vera Wang and Oscar de la Renta, hosted livestreams on their websites, often accompanied by widgets that allowed viewers to post comments about the shows on the brands sites as well as on Facebook and Twitter. British luxury label Burberry took it one step further, by making select items from the

COPYRIGHT EDGELL COMMUNICATIONS, INC. AND APPAREL 2010

HOW SOCIAL MEDIA IS REVOLUTIONIZING THE APPAREL INDUSTRY ONE MESSAGE AT A TIME

shows available for purchase immediately afterward, and supplying some of its best customers with iPads to browse and purchase from the shows through a special iPad application. Other apparel and fashion brands are pioneering unique social media ideas, including: Marc Jacobs, whom Macala Wright Lee, owner of digital marketing agency Fashionably Digital, says is one of the few fashion brands that has fully embraced social technology from the outset, used location-based social media site Foursquare during the recent New York runway shows. Jacobs and Foursquare created a Fashion Victim badge, which allowed Fashion Week attendees (and others) to check-in at any Marc by Marc Jacobs stores in New York and around the country to unlock the badge. Four people who unlocked the badge in New York were randomly chosen to receive tickets to the Marc Jacobs show, Lee explains. The partnership provided both Marc Jacobs and Foursquare with low-cost, word-ofmouth marketing, Lee says. In addition, when launching his first mens fragrance, called Bang, Jacobs built a Facebook game titled Bang! Youre it!, where users could bang their friends for chances at giveaway prizes. Ann Taylor LOFT. After being criticized for using models that dont reflect its workwear-for-average-women image, the company began using its Facebook site to post pictures of its own corporate staff in a range of sizesposing in its clothes. The approach was wildly popular with customers, who responded positively to the opportunity to see how LOFTs outfits fit on real women. Levis. The denim brand recently launched a Facebook-enabled shopping page so customers can engage in social shopping, sharing Levis product recommendations with other Facebook friends, and declaring likes for specific

products. Using the aggregated Facebook data, Levis creates a personalized shopping cart based on what consumers friends have suggested they would like, hoping to increase upsell. Threadless.com. The T-shirt company whose whole business model stems from social media recently made a Facebook fan push by posting a new and fun video every hour. The hosts in the video pick up to three fans to receive T-shirts and/or a promotional code for merchandise. Apparel companies who truly embrace the social networking philosophy are also doing social things that extend beyond new media, making the philosophy central to their overall branding approach. Fashion etailer Moxsie.com, lifestyle apparel brand Lululemon, and Diesel USA, for example, are three brands that just get it, says Lee. Moxsie hosts food trucks for area business employees to have lunch with them on Fridays; Lululemon hosts free yoga classes in their stores on Saturdays; and Diesel inspired Gen Y to live a little with the Faces Of Stupid campaign, she notes.

What Goes Into Crafting an Effective Social Media Strategy?

Before any apparel company can engage with the growing social community online, it must have the right strategy. Social media is an extremely public form of communication and it must be done properly, or what makes it a superb communications tool speedy, round-the-clock, direct connections with consumers can quickly become a business detriment. A carefully crafted and thoroughly vetted strategy is essential.

A Four-Step Plan
1. Define and Determine Objectives. Because the term social media has become a catchall for everything from content to web sites to text messages and videos, defining social media and what it means for your company is an important step in any social media strategy.

COPYRIGHT EDGELL COMMUNICATIONS, INC. AND APPAREL 2010

It can be tricky to have social media conversations within a company because one person thinks social media means videos and someone else thinks youre talking about customer service on Twitter, explains social media expert Bear. Determining up-front what type of social media makes sense for the company goes a long way toward crafting a social media strategy that yields results, not confusion. Three general avenues have emerged: Social media for generating awareness. Social media for boosting brand loyalty. Social media for driving sales. Companies must ask themselves, Do we want to use social media to make people aware of a new product or a new company? Are we looking to increase sales and get customers to transact with us? Or are we seeking to promote loyalty and turn our customers into a volunteer marketing army? Baer explains. Businesses that do social media best understand these three approaches, pick one, and really develop a clear strategy for how they are going to utilize social media, he adds. New research from Gartner shows that building brand loyalty is one of the strongest goals for apparel companies that have embraced digital marketing (which includes both social media and mobile marketing). Among apparel firms surveyed, brand loyalty was the second most-frequently stated use of digital marketing, the study found. Building consumer awareness is also key, states Gartners Johnson. About half of our apparel respondents feel that is the most important use of digital marketing. 2. Get organized. Social media represents a broad change in how people communicate with one another. This is exciting for businesses as it presents new channels and methods of reaching consumers but because it is so new, it must be thoroughly thought out. Just putting up a Facebook page does not make a social strategy. Nearly 80 percent of

apparel respondents to the Gartner study report already having a digital market organization of some sort in place, which bodes well for the industrys social media efforts. Social media also impacts all aspects of a company legal, finance, R&D, operations, customer service in ways that other forms of marketing doesnt. As such, putting together a cross-functional team to oversee social media strategy is a must. Companies must get organized internally and craft a social media guidance council that represents the company across all disciplines, Baer advises. In addition, companies need to understand who is going to be responsible for social media a designation that usually shifts as the strategies mature, Johnson notes. At the start, a lot of social media projects will be managed by IT because they are the ones who will know how to set up the technology, but once a company has a digital marketing function in place for a while, it usually falls under the province of marketing and/or brand management, he explains. 3. Listen to the chatter and act accordingly. Even a company without a formal social media strategy will find that plenty has been said about it already on the social web. Passionate consumers are the nature of the apparel industry, so it follows suit that apparel customers are actively talking about products they like and dislike online. Companies need to know what is being said on the social web about their brands and their competitors. They also need to know who is saying it and where, Baer says. That analysis is really important because it can help companies position the brand where the action is. A company should be active where people are already talking about it. If there is already a dialog about you on Facebook, for instance, thats where you should immediately jump in, Baer explains.

COPYRIGHT EDGELL COMMUNICATIONS, INC. AND APPAREL 2010

HOW SOCIAL MEDIA IS REVOLUTIONIZING THE APPAREL INDUSTRY ONE MESSAGE AT A TIME

4. Plan ahead for problems. Social media represents new and uncharted waters for many companies, so there are plenty of opportunities for blunders, and early adopters have experienced both successes and failures in this new paradigm. Good news travels fast online, but bad news travels faster, so preparing a social media crisis management plan before launching into social media is a wise idea. Monitoring services such as Google Alerts or Twilert can tell a company when its name or brand name is mentioned, in effect setting up digital listening posts for the company to warn of a brewing crisis. It is also crucial to outline responsibility for social media so there is a clear process to follow when issues do arise, Baer says. Create a flowchart showing, literally, what to do and who to contact when crises pop up. Lastly, when negative events do occur, the best way for a company to emerge intact is to acknowledge the crisis through its social media channels. Put it out there that you know you made a mistake, as Gap did recently with its logo, Baer says. It is also beneficial to create an FAQ about the crisis to keep consumers, bloggers, and other social media users up to date on the companys efforts to solve the problem(s). Adding a message board where users can post comments that are still public but not as public as Facebook or Twitter can also help to ease the pain.

meet a number of key business objectives, including monetization of this channel through generation of sales and leads. Companies are also using social media marketing to achieve softer objectives such as improved brand awareness and reputation.

Metrics and Monitoring Are Key

For apparel brands, an increase in direct traffic to a brands e-commerce site as a result of a social media play is often regarded as the most important metric for assessing social media activities. Companies should approach metrics based on the maturity of their social media strategy, Baer advises, using business-level metrics in the early stages and drilling down to more granular examples as the companys social media channels become more active. For example, an early goal of Lets generate 50,000 new visits to our online catalog from social media, is a good highlevel objective. Later, the goal might be, Lets make sure that we have x-number of reTweets on our blog post which talks about our new catalog, Baer explains. The good news is that ROI is getting clearer. We have seen pilots and case studies where companies are able to project future demand based on signals they are seeing in social media, notes Gartners Johnson. Apparel companies also are turning to technology tools to keep tabs on their social media efforts and attempt to determine social medias impact on their branding and business strategies. According to Gartners research, apparel companies listed blog monitoring software and social media sentiment analysis tools as most important when evaluating social media success. Together, blog monitoring and sentiment analysis tools allow apparel brands and retailers to automatically extract, categorize, and summarize information from social media conversations and measure the emotions in shoppers dialogues. These solutions help

Is Social Media Yielding Concrete Results?

The newness of social media platforms has made quantifying the impact of social media tough to pinpoint, although companies cite rising Web traffic and more customers using promotions as proof. Companies are still struggling, however, to measure the success of their social media marketing in terms of ROI and in meeting a range of business objectives. A recent eConsultancy report finds that companies are using social media to help

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companies analyze the root cause of sentiment and gauge its level of influence, according to a recent SAP whitepaper, Retailing In a Social Media World. These tools allow marketers to insert new cues into the market maybe debut a new product that seems to be in the crosshairs of what is trending from your social media outlets and then see what happens to the mood of the market, adds Johnson. This gives marketers a way to gather tons of social media market intelligence without having to gather together a panel or focus group. However, although companies have grasped the importance of these tools, few companies feel like they have implemented an effective monitoring or metrics strategy. Gartners research shows that about twothirds of apparel companies list monitoring as a key objective, but only 10 percent felt that they do it well today. The upside is that there is plenty of room for improvement. One effective method is to utilize monitoring and sentiment tools with existing operations software, says SAPs France. The ideal social media solution integrates software for analyzing customer sentiment with software for managing key retail processes including customer relationship management and associated downstream retail business processes such as merchandising, supply chain management and workforce management, France explains.

What Happens Next?

Considering social medias dynamic impact over its short lifetime, it is clear that its growth and future potential are enormous. Apparel brands and retailers need to be along for the ride to keep up with customer sentiments, stay in tune with trends, and hopefully, deliver a boost to business. Predictions for what is coming up next in social media include: One-to-one marketing. I think well see apparel companies doing more things like

giving customers the option to receive texts when there are offers that are specifically relevant to them. Companies will use their social CRM data to pinpoint what a specific customer wants and make a promotion really enticing, says Johnson. Community-driven sales cycles. Expect brands and retailers to get their communities more involved in sales cycles, by letting customers tell them what they do and dont like in order to predict product sell-through and make online merchandising decisions, says Lee. Companies will then use this information to drive in-store and online sales, and to develop more advanced ways to increase repeat purchases, she explains. Location, location, location. Locationbased social sites are leading the next wave of social media. Sites such as Foursquare and Gowalla have made checking in a great way to get online supporters to check out brick-and-mortar store locations and to drive social interaction with brands. The location trend is also interesting because it combines social media with mobile and online commerce as well as traditional retail sales. That confluence of mobility, locationbased services, and the social web creates prime real estate for apparel marketers, says Johnson. Regardless of the next direction social media takes, one thing is clear: It is here to stay. For apparel companies, going social is no longer an option; it is a strategic business element that provides them the opportunity to collect detailed information on users and their habits, elicit real feedback and suggestions, and refine their offering and messaging to better suit user demands. There are, of course, positives and negatives associated with social media, but the opportunities for companies to understand and work with their customers have never been as great.

COPYRIGHT EDGELL COMMUNICATIONS, INC. AND APPAREL 2010