Social commerce is a growing priority for digital marketing leaders, but the underlying ecosystem continues to evolve rapidly while effectiveness remains inconsistent.
Social commerce is an element of digital commerce that uses social media to promote and drive a seamless path to purchase of products and services. On one hand, it is reshaping how people buy and sell, which provides platforms and brands with new opportunities for UX and revenue streams. On the other hand, digital marketing leaders struggle to decode social commerce’s complex ecosystem because its effectiveness varies greatly, influenced by factors like customer demographic, geography, platform and industry.
As marketers face ongoing budget scrutiny and are under pressure to deliver tangible commercial ROI at scale, it’s critical to understand how and where to invest in social commerce execution to maximize growth. sift through the noise to determine what aspects are critical to growth and what is hype.
There are five key social commerce trends digital marketing leaders must consider and incorporate into their strategies as we head into 2023.
What Works in China Won’t Work in Other Parts of the World
China dominates the social commerce landscape, fueled by social platforms that are ingrained in Chinese consumers’ everyday lives as a way to engage friends, consume content and make purchases. Western marketing leaders are hoping to reproduce China’s success, but struggle for a few key reasons.
First, Western consumers’ trust in social platforms has eroded in recent years, likely impacting the adoption of certain social commerce features such as native in-app purchases. Some types of social commerce execution such as the metaverse, social platform shops and native in-app purchases remain relatively immature outside of China, with limited effectiveness in the Western world.
What should digital marketing leaders do? Assess the social commerce ecosystem in terms of execution types, platform capabilities and format to identify what works best for their customer audience and digital commerce objectives.
Related Article: 5 Trends in Ecommerce That Will Impact CX in 2022 and Beyond
Platforms Changing Direction Creates Volatility
Some social platforms were exploring native in-app purchases but are refocusing on its core ad biz instead.
Shifting priorities of social platforms also can impact social commerce strategy, creating volatility for digital marketing leaders who must continually keep abreast of changes and trends. For example, some social platforms such as Facebook and Instagram are taking a step back from driving native in-app purchases, focusing more on advertising that drives the path to purchase through other digital commerce sales channels.
Meanwhile, other brands are turning attention away from traditional social platforms experimenting with new emerging opportunities, such as setting up shop in the metaverse to support seasonal campaigns and product promotion.
What should digital marketing leaders do? Monitor emerging social commerce opportunities, such as the metaverse, to help determine when best to adopt a test-and-learn pilot for these types of execution.
Live Stream Commerce Is Growing, But Scaling it Is a Challenge
Livestream commerce is growing in popularity among brands and consumers alike. Roughly a quarter of marketing leaders surveyed told Gartner that it is part of their digital commerce marketing mix. From a Western consumer perspective, Gen Z are latching onto the capability the fastest compared to other generations. Adoption does vary by industry, too, with beauty, fashion and homewares being the most prevalent.
However, digital marketing leaders in the West are struggling to replicate the success seen in China, where marathon live streaming shows through social media platforms like WeChat are the norm, drawing impressive audience engagement and capturing significant revenue. This is another example of an execution practice from China that doesn’t work with Western consumers who have different social media consumption behaviors than Chinese consumers.
What should digital marketing leaders do? Develop a live stream pilot program using a platform like TikTok as a cost-effective option to test, learn and scale if successful. Scope the pilot to consist of three to five shows that could drive the path to purchase through direct or third-party digital commerce sales channel partners.
Related Article: What You Need to Know About Marketing on TikTok
Social Commerce Consumer Adoption Is Growing
In spite of privacy concerns, consumer adoption of social commerce is on the rise via advertising, which is driving purchases and the visibility of brands. This phenomenon is reflected in the recent #TikTokMadeMeBuyIt hashtag that has been used over one billion times already by platform creators to drive visibility and purchase of products. A short-form video on the platform introduces products and brands to TikTok users and offers consumers a link to purchase.
We think about #SocialCommerce as selling through platforms (online) but this shows how channels can stimulate footfall. Excitement is generated by influencers digitally and consumer urgency fulfilled by stores. All #retail should look at tactics like this. #TikTokMadeMeBuyIt pic.twitter.com/Ed3bc3oFZV
— Charlie Wade (@CharlieAMWade) January 8, 2023
What should digital marketing leaders do? Develop a social commerce strategy that appropriately allocates resources to types of execution that will drive short-term results, plus innovate with a longer-term view to meet evolving customer behaviors.
Paid Advertising Remains Most Effective
Despite the constant change in strategy and direction of social media platforms, paid advertising remains the bedrock for social commerce success. Paid ad formats on platforms such as Facebook and Instagram have a relatively higher level of maturity and effectiveness in social commerce. However, mediums such as the metaverse are being hyped up but are limited at this time.
Paid social advertising can serve multiple purposes and can be executed through many ad formats to activate social commerce. Its success must be primarily measured in revenue uplift and ROI, with brand awareness and engagement as secondary measures of success.
What should digital marketing leaders do? Focus efforts on paid social media advertising execution as an always-on tactic through a combination of paid shop now ads and shoppable content formats that drive the optimal path to purchase.