Why Marketers Still Aren’t Sold on Social Shopping
Social commerce, placing a product order in Instagram etc, is huge in Asia but it hasn't caught on in the US. Why?
I talked with Catherine Perloff at Adweek last week about what might be happening.
To understand the push for in platform transactions you'll need to start with the iOS tracking changes. When Apple introduced App Tracking Transparency it severely degraded Meta's ability to measure the effectiveness of their customer's advertising.
Designing a solution to facilitate the transaction on the social platform is Meta's (and others) plan to mitigate the impact of the iOS tracking changes.
Transacting in app changes Meta from an Ad channel to a commerce platform. If they become the platform then they retain the purchase and behavior insights which enables them to measure the effectiveness of their advertising. If they let the user go to the merchant’s website, they lose those conversion data points.
Pretty simple and logical play, but it hasn't worked.
Meta tried very aggressively to get advertisers to embrace direct checkout, they were dishing out $10k-$25k in free ad spend to try it out. I have a friend who’s done it multiple times. The results were not favorable.
In order for a brand to embrace in app check out they have to see higher conversion rates than when sending a customer to their website. So far, this hasn't been the case. In one anecdotal example, CAC was 20% higher when directing a customer to transact in app.
As a result of the poor performance, Instagram announced a pull back on their Shop tab. This could be the end of it or simply a speed bump in the evolution of commerce & social apps converging.
From a consumer perspective, we might just be early. Social platforms are still the overwhelmingly top channel for ecommerce businesses to acquire customers.
Some brands see incredible effectiveness leaning into Reels and Tiktok. Live stream product demonstrations are also gaining in popularity. Lashify © has 1M IG followers and does live product demonstrations. They are one of the fastest growing brands in DTC ecomm with a Charm.io growth score of 94.
I do think we’ll get to a point where the transaction can consistently take place in a social platform. China is crushing it with live video influencer shopping. They were also years ahead of us with digital payments and on demand delivery.
Aaron Vidas, from influencer management platform Strategy Box commented his thoughts on why it’s not working in the US.
“When I lived in China social commerce was woven much more into the fabric of daily life. There's 'buying shows' and 'buying hours' basically like QVC or the Home Shopping Network on steroids. I think Meta, etc. have fumbled social commerce because they've just stuck a cart on an ad vs. put a concerted effort to create channels, shows and content that educates a potential customer on a product and that's what drives them to buy. Such a missed opportunity as it's such an effective way of selling in Asia.”
China can very much be a glimpse into the future potential of commerce in the US but sometimes the trends don’t always catch on. It is a different market with different consumers. An example of this is Meta attempting to force transactions into their Messenger app in 2016. This didn't work either, but it's clear Meta will do whatever it takes to transition to a Platform.
Link to the Adweek article is here. Enjoy!
