Event Marketing: The Key To F-Commerce?

Editor’s note: Patricia Nakache is a General Partner at Trinity Ventures where she invests in early stage social commerce and entertainment companies. Trinity Ventures is an investor in the following companies mentioned in this article: BeachMint, Gigi Hill, Kixeye, Primalistas, Ruby Ribbon, ShopIgniter, and Zulily. You can read more about Patricia at the Trinity Ventures website or follow her on Twitter @pnakache.

Speak to people who think Facebook will be a screaming buy at its likely IPO valuation of $100b+ and they will say with confidence, “Facebook is just getting started.” What they mean is that Facebook is just starting to find ways to monetize its 845 million users; the social network started with the lowest hanging fruit, which was advertising, then moved on to taking a cut of in-app virtual goods purchases, and now presumably has a long laundry list of other ways to enmesh its users and grow its top line.

High on that list is a controversial proposition: commerce on Facebook, otherwise known as F-commerce. Though an initial rush of branded retailers set up storefronts on Facebook pages, several of them, including GameStop, JC Penney, Nordstrom, and The Gap, decided in February to shut them down. It turns out that simply replicating a web storefront on Facebook isn’t compelling for consumers, particularly when the brand’s fully-functioning and pretty convenient web site is only one click away. Moreover, brands were leery of driving commerce traffic to Facebook rather than to their own sites where they could better control the experience and manage consumers through a purchase conversion funnel.

So what kind of shopping experience works on Facebook? The answer, in a nutshell: event marketing.

In the offline world, events have long been an effective marketing tactic for generating excitement among customers, driving foot traffic into stores, and selling product. Of course, the most common events in retailing are sales events, some of which have become so widely recognized that they are brands in their own right. Think Nordstrom’s Half Yearly Sales. Other flavors of events in bricks and mortar commerce include celebrity events, such as author speaker series at bookstores, or trunk shows in department stores to preview the latest offerings from high-end designers. These different types of events all accomplish the same goal: get people in the store and get them excited to buy stuff.

One sector that has fully tapped into the power of event marketing is the party selling industry. Companies like Pampered Chef, Stella & Dot, Gigi Hill or Ruby Ribbon understand the irresistible draw of a party event thrown by a friend paired with an opportunity to buy great product. The direct sales industry is sizeable, with $30b in sales in the US driven by 15 million sales people, and is attracting an increasing amount of venture investment as party sales become recognized as “social selling” that can be turbocharged with technology.

Over the last few years, event marketing has also transformed ecommerce. Private sales sites such as Zulily and “daily deal” sites such as Groupon create excitement around daily sales events with limited inventory and for limited time periods. Moda Operandi and Primalistas are bringing trunk shows online with pre-order “events” for high-end fashion.

Given the proven effectiveness of event marketing, it stands to reason that events could provide the linchpin for commerce on Facebook. A healthy percentage of the social network’s 845 million users are milling around on the site at any given time browsing for interesting content or entertainment. What better venue to organize an event?

Social commerce leader BeachMint pioneered event marketing on Facebook with its live 2011 CyberMonday sales event. Hosted by 2 bloggers, the 90 minute video event featured pre-taped footage of BeachMint’s celebrity influencers, live call-ins from those celebrities, and lots of great deals on limited quantities of products from across BeachMint’s 4 brands, JewelMint, StyleMint, BeautyMint, and ShoeMint. The results of the event were compelling with over 50,000 visits and all items promoted selling out. BeachMint is now planning a series of live events on Facebook, including one today with StyleMint.

Social gaming companies are also savvy to the power of event marketing on Facebook. Kixeye, which develops strategy games on Facebook, periodically hosts tournaments and other special events across its three titles, Backyard Monsters, Battle Pirates, and War Commanders. Battle Pirates, for example, has featured a series of “Base Invader” events that rally players to work together to defeat The Draconians, an evil nemesis. During these events, Kixeye sees its visitor and revenue metrics spike as players flock to the event.

A few established retailers are getting into the act with innovative event-based campaigns of their own. Home Depot has used a tactic called “like-gating” to create a game-like atmosphere and generate excitement around sales events. For their Spring Black Friday sale last year, Home Depot posted on Facebook that if the post received 250 ‘Likes’, the retailer would unveil the next item in its sale. Within 8 minutes, the post had over 1000 ‘Likes’ and, within 2 minutes of the sale item being unveiled and made available for purchase, it was sold out. The results of the 3-hour event: Home Depot added 61,000 fans (a 28 percent increase) and sold out of all four sale items.

Instead of creating its own sales events, Target capitalizes on the meaningful events in its customers’ lives to drive commerce. The retailer launched a “Give With Friends” app on Facebook powered by social commerce platform provider ShopIgniter that facilitates gift-giving for events such as birthdays and anniversaries Friends, colleagues and family, in other words the people in your Facebook social graph, can chip in together on a gift card and personalize the card and message to the occasion. The recipients can redeem the gift cards online or in store through their mobile phones.

In the bricks and mortar world, retailers have long understood that different venues call for different retail formats – think of the differences between a flagship Starbucks in a downtown location relative to a Starbucks tucked inside a Safeway supermarket. The same principle holds true in ecommerce. Retailers will succeed in driving ecommerce on Facebook but they will need to adapt their approach to the venue. My bet is their formula for success will involve event marketing.