Social commerce is a trend that has enjoyed consistent growth since the adoption of Web 2.0, over 14 years ago. Although it is not a new topic, it continues to experience expediential growth. The process has evolved from user reviews and blogs to the ability to sell products directly to the consumer through social medial channels using a selection of services available to businesses or by directing them to an e-commerce website. In addition, it has changed the way users search for products and share that information with friends, family and potentially a worldwide audience.
This blog aims to develop an understanding of how social commerce has become a formidable force today by taking a look at where it all started, how it has evolved, the importance of the area today and threats that may affect the future of digital marketing.
Where it all started
Social commerce is a topic that emerged during the adoption of Web 2.0; a series of new technological improvements were made to the internet. The advancement of Web 2.0. in 2014 meant people were able to interact online. Blogs became an online portal for people, or ‘bloggers’, to share their thoughts, interests and professional knowledge, thus disrupting media and changing the internet landscape. Social media platforms were invented, where sites like Facebook and MySpace became a familiar online location for thousands of online users. People would visit these social sites to communicate with friends using their profiles and re-connect with acquaintances from years gone. Over time, these channels were used by brands to showcase products and highlight benefits.
In the early days, social commerce’s design processes and economic benefits were relatively unknown, with research undertaken to help understand how this new landscape would and could look. Brands reworked their business models to adapt to this change and harness new opportunities. As a result, users found a place to interact with businesses online like they haven’t before. User generated content stood at the forefront of opportunity for brands to harness Word of Mouth marketing; this is discussed further in this blog.
Social commerce and its importance today
In today’s world, social commerce can be found in many places across the internet. It dominates Facebook, Instagram and Pinterest, where businesses harness capabilities to offer product insight, raise brand awareness, build consumer confidence and minimise the interaction needed by the user to find a product for sale on their website. Video, images and copy offer an excellent way for users to experience products according to interests. Social platforms and other online tools use algorithms to suggest items of interest by using third party data, a topic discussed more later in this blog.
Social commerce now offers substantial growth opportunities, including financial, for any business that deals in e-commerce. However, it is different in approach as e-commerce is solely seen as a website or app that provides the user with the ability to browse a selection of goods by using product categories and artwork prompts created by the brand. However, social commerce can still act as the instigator of such browsing, should you user land on the website through a call to action button, social media post/video, or have searched for the website following recommendation.
In a 2021 Statista report (Figure 1), the value of social commerce is forecast to continue to rise in value to over $2,900 billion by 2026, from 560 Billion US dollars in 2020. However, Hootsuite predicts a total value of $604.5 billion by 2027.
Today’s social commerce audience
Social shopping is a worldwide phenomenon, with China standing at the geographical forefront of online shopping using social platforms. In addition, the Covid Pandemic has accelerated adoption across cultures, with experts expecting an audience growth of more than 35% in the United States market alone in 2022.
Social commerce is reported to be utilised by a third of young people aged 18-34 in the United Kingdom. The social interaction between brands and customers is developed by utilising Facebook groups and pages, Instagram and TikTok. Brands use these spaces to nurture a community by encouraging user generated content and interaction to grow brand awareness and customer confidence. However, communication must be clear, consistent, and of high quality to resonate with the audience and improve perceived value.
User Generated Content and the role it plays in social commerce
User Generated Content (UGC) continues to offer brands the opportunity to connect with consumers by offering authentic experiences, which is considered highly favourable over content created directly by the brand. Reviews, social media images, posts, and videos are left by customers who have tried products that offer transparent insight into quality and value.
Reviews, social media images, posts, and videos are left by customers who have tried products that offer transparent insight into quality and value.
In a Stackla Survey, 92% of marketers believe most or all of the content they create resonates as authentic, whereas only 51% of consumers think brands created authentic content. The same Stackla survey identified the importance of UGC, where 79% of consumers say it strongly impacts purchasing decisions. Modern-day consumers want to see authentic content produced by users, friends and family, or peers that have experienced the product instead of what marketers want them to see and hear. It is for this reason UGC remains an integral part of social commerce.
Key issues affecting social commerce
Despite the term’ social commerce’ lacking a stable definition, the area has gained momentum rapidly. Businesses can nurture new relationships and build brand confidence and awareness with the publication of various content types, videos and broadcasting streams. Communities of followers and brand advocates have developed, and peers are recognised as influential stakeholders. However, data needs to be collected, stored, and evaluated to gain insight into what users interact with and enjoy. Data security has been an ongoing concern for internet users for a substantial period.
- Data privacy and security
Data Privacy and Security remains a significant key issue affecting social media and social commerce from a browsing and purchasing point of view. Consumers have trust issues surrounding data security being ‘leaked’ to organisations with less than favourable intentions. Historical events also play a significant role in trust between the potential customer and brand when buying online. Incidents such as Facebook’s Cambridge Analytical Data error that made worldwide headlines in 2018 resonates in peoples mind’s long after the event itself. Privacy issues continue to evolve as technological advances offer marketers even further insight into buyer behaviour, leaving the users’ information vulnerable to interception. Relationship marketing has been identified as a building block for building consumer trust, yet negatively impacted privacy concerns.
Data shared on the internet extends beyond a user’s locations and email address, with financial details stored online for transactional requirements. User perception of payment gateways is a fundamental part that can lead to greater or lesser trust, affecting purchase intention. Academic journals have revealed that despite information on data security and sharing being available, users rarely read the offering, which seems counterproductive considering safety remains a significant concern. Does this mean the information is challenging to interpret by users, especially as technologies evolve and more significant data insight becomes available?
Mobile phones offer users convenience and ease of use for purchasing online; however, a lack of ‘take up’ has been identified, despite successful adoption of the social commerce experience and concept. A study in 2021 used demographics to determine whether there were key attributes that lead to choice in user gender (male and female), data concluded as insignificant. However, the same survey demonstrated a marginal difference between age, with Generation X (36 – 56) more likely to use a mobile phone to purchase online by finding it more convenient than Generation Y (18-35).
Critical evaluation of the impact these key issues may have on the future of digital marketing.
Coinciding with the current issues surrounding social commerce security, in 2021, Google announced the phase-out of third-party cookies, the ones used to track online behaviour of website visitors outside the hosts’ website. The phase-out won’t include a replacement offering from Google, and the process is expected to be completed before the end of 2022. The reason given for the removal of third-party cookies was that Google acknowledged the system failed to provide users with adequate data security to match development in technology. Google isn’t the first search engine to block third-party cookies as Firefox and Safari did some years ago. However, it is Google (Chrome) that enjoys the majority browser market share of 62.87%, compared to Safari at 19.3% and Firefox at 4.2%, suggesting that due to the size of consumption, Google’s phase-out will have a more substantial impact on digital advertising than that of its counterparts.
So how will this affect social commerce? Digital marketers that rely heavily on the data obtained from third party cookies to target advertisements based on user movement across the web will have to look for alternatives to source relative information to target and deliver ads to users. In addition, this data is often used to target social groups when implementing advertising using analytical tools provided by social media platforms. This, in turn, means that marketers will lose important individual data needed in measurement, which could impact the effectiveness of a targeted campaign and the budget.
Shortening insight campaigns may be less effective, resulting in more budget to rectify incorrect predictions. Instead, more emphasis will be put on group data, which will impact the personalisation of ads. Additional sourcing and purchasing data from media powerhouses such as META, which stores individual data at mass outside of the third-party cookie remit, may be an alternative way to aggregate data. However, this suggests further impact on the budget. The withdrawal of third-party cookies places even more value on first-party data. Publishers are hard at work to put a content first category in place, alongside encouraging user subscription to gather further data from users when of their websites.
Predictions and Recommendations
Despite third-party cookies tracking valuable details such as shopping preferences and device details, Forbes Council Member and industry peer Michale Caccavale predicts the issue of removal will not cause a significant problem for digital marketing. However, other industry peers have recognised it as a period of uncertainty, exemplified by the continual expansion of Googles’ end of play’ deadline associated with the withdrawal. Further to this, a recent survey undertaken with board members of The Association for Online Publishers suggests a varied understanding of how prepared they are for the demise. In addition, extensive analytical tools provided by social platforms provide businesses with data that helps marketers determine limited demographic, geographic and physiographic data. Therefore a recommendation for marketers would be to use the analytics provided on individual social platforms to target audiences based on behaviour using each social platform.
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Author: Suzanne Ashton
Founder, Everything Horse