Media platforms

Social media platforms embrace e-commerce as a saving grace. Here’s why.

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It’s no secret that social media platforms derive the vast majority of their revenue from the sale of targeted ads. In 2021, Meta (formerly Facebook) generated $117.93 billion in revenuethe majority of which — $114.93 billion – came from the advertisements. However, while this model may have worked for tech giants in the past, things are changing fast.

As the demand for privacy among consumers increases, a growing number of companies wish to present themselves as the defenders of personal information. In 2021, Apple introduced a new feature called Application Tracking Transparency (ATT), giving users the ability to block apps from spying on them as they switch between apps. A month after the feature was introduced, a huge 96% of US users have opted out of tracking.

Related: The Changing Role of Social Media in Ecommerce

Not only has the launch of ATT helped Apple turn privacy into a competitive advantage (the company mobile app advertising more than tripled within six months of the feature’s launch), but it also devastated its competitors. The fact that social media companies can no longer track consumers between apps means they can’t target users with ads as well as they used to because they can’t identify navigation between apps. content and create more accurate consumer profiles. As their advertising loses value, the inevitable happens: advertisers pull out. According to Meta CEO Mark Zuckerberg, Apple’s privacy changes will lead to $10 billion in sales lost in 2022.

As a result of all this, social media platforms are desperately looking for new ways to make money. The good news is that while advertisers are fleeing social media, users aren’t going anywhere. In 2021, Internet users spent on average 90 minutes on social networks. Fast forward to 2022, and the time we spend on social platforms daily has risen to 147 minutes.

Social media is a great way to share our lives with others and stay in touch with friends, but it can also be used by customers to learn more about brands and the products and services they sell. Many users are already connecting with brands on social media, and 9 out of 10 say they buy from companies they follow on social platforms. This makes them ideal platforms for brands to engage with new existing and potential customers.

Related: 5 Steps to Improve Your Social Commerce Strategy

social commerce

Enter social commerce. Social commerce is a model that allows brands to sell products directly on social media platforms such as Facebook, Instagram, Snapchat, and TikTok, without ever leaving the apps. There are a myriad of ways social platforms can do this, from Shops on Instagram – which allow users to browse and buy products on brands’ Instagram pages – to Snapchat Shoppables – which allow users to “try “virtually products before clicking a “Buy Now” Button to purchase them. Whatever the approach, one thing is clear: social commerce could be social platforms’ best bet to increase their revenue going forward.

Social commerce is a growing trend. Accenture believes that social commerce will grow three times faster like conventional commerce, growing from $492 billion last year to $1.2 trillion by 2025. Charlotte Tilbury, Ray-Ban and Zimba are just a few brands already using social commerce to reduce friction and increase conversions. However, smaller D2C brands can also benefit.

Augmented reality

It’s not just that social commerce makes it easier for customers to buy products. It can also make the overall experience more enjoyable for the customer and more profitable for the brand by encouraging discoverability and increasing engagement. This is particularly the case with social commerce experiences enriched with augmented reality (AR), which allow users to virtually “try” products before buying them. Augmented reality is a feature buyers expect from businesses. Already in 2019, three-quarters of customers said they use AR when shopping. And more than two-thirds said they would buy more often if a brand offered an AR experience.

Some social commerce AR experiences, like Halloween Instagram and Snapchat filters launched by NYX Professional Makeup, can introduce users to new product lines in a fun and memorable way. In this case, AR filters allow users to explore a haunted dollhouse and try out the different haunted makeup looks sported by the five dolls inhabiting the house. Combined with a feature like Instagram Checkout or a “Buy Now” button, this type of filter can prompt users to make spontaneous buying decisions.

Other augmented reality experiences allow shoppers to simply “try on” items virtually while browsing stores or social media feeds, helping to alleviate concerns about size and fit. Gucci’s partnership with Snapchat in 2020 allowed users to overlay a digital version of Gucci shoes on their feet, then purchase them immediately with a “Buy Now” button. Research shows that this type of use of AR can increase conversions by 33% and reduce returns by 22%.

TikTok, the new (rather) social kid on the block (now a leader in organic reach) has also started a partnership with Shopify, which allows Shopify merchants to automatically create TikTok ads to promote their products. Merchants can connect their online product catalog and run these ads on TikTok, which can then lead to direct purchases within the social platform. Marketers can gain additional reach by promoting these ads on TikTok with media spend, just like on any other social platform, which increases discoverability by allowing consumers to find these ads in their feeds. For platforms, this model translates not only to a percentage of product sales, but also to revenue from merchant media spend.

The next natural step in this model will be to connect marketers with influencers to promote their ads and products, so they can benefit from organic reach through their followers. Using the power of AR, influencers could even “wear” these products virtually (e.g. makeup, a handbag or even clothes), with the added benefit of saving brands the cost of shipping products. To boot, it would also help promote the AR virtual try-on filters to consumers, who could then try them out themselves, take photos and videos, and share them with their friends, increasing brands’ organic reach in a way exponential.

Related: How Augmented Reality Will Shape the Future of Ecommerce

Direct commercial purchases

Another growing trend on social media is live shopping, which I’ve covered in this article before. These are buyable live streams where influencers showcase products while interacting with the audience, who can purchase those products while they watch. Augmented Reality will soon make live shopping much more engaging, interactive and personal by allowing audiences to virtually “try on” these products for themselves while they watch live streams, increasing shopping confidence and conversions. .

For Meta, Apple’s ATT could have been “harmful”. But at least in 2021, Meta was considered the social commerce leader. Of course, just because social commerce is touted as the “next big thing” doesn’t mean it will succeed in replacing the revenue that social platforms have lost as a result of Apple’s privacy changes. That remains to be seen.

Related: Social commerce is the future of marketing. Are you ready?

However, if the massive investments social media giants are making in social commerce solutions is anything to go by (earlier this year, Snapchat released Catalog-Powered Shopping Lenses), then we can expect this news way to buy remains and leads to big increases in sales for brands down the line. Add to this the recent economic turmoil caused by inflation and the logistics of e-commerce, and it becomes clear that the integration of new technologies such as augmented reality could be the key to the mass adoption of social commerce by consumers. . E-commerce and AR could, indeed, become the saving grace of social media platforms.


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