Why Marketers Still Aren’t Sold on Social Shopping

The pandemic was fuel to the digital advertising economy, as homebound shoppers spent hours online, some for the first time. But one online behavior, already common in Asian markets, had not yet taken off in the U.S.—customers buying products on social platforms, an intersection of the white-hot commerce and creator economy sectors. Capitalizing on pandemic-induced behavior, platforms tested a raft of new social commerce features last year. Not only could social media companies earn a cut of the transaction, but they could accrue valuable purchase data—at a time when Apple’s deprecation of mobile identifiers was making signals scarce. But now, some platforms have aborted their social commerce efforts. Meta is phasing out its shopping page, removing the button that sends users to the existing page by next March, after introducing the Shop tab in November 2020, The Information reported earlier this week. Instagram canned its native affiliate marketing program, which let creators earn a commission on tagged products on Instagram posts, last month, a little more than a year after launch, Insider reported. Facebook said it was shutting down its live shopping tool on October 1. And TikTok nixed an expansion of its own live shopping program into the U.S. and Europe, after struggles with a trial in the U.K., per a report in the Financial Times. “There were glimmers that the consumer behavior was shifting to this headless commerce,” said a media buyer at a holding company, who requested anonymity to protect industry relationships. “What got lost is that the user experience is still not ideal, both for the consumers as well as for the enterprise side of the brand.” Eight sources told Adweek that social shopping has failed to take off because it hasn’t been worth the time and cost for businesses or creators, while people are still not completely comfortable buying from social platforms. Sources said that what is growing is creator-aided affiliate marketing, where creators post links on their platforms—and earn a commission when their followers leave the platform to make a purchase. Social commerce is anticipated to grow 34% from last year to $53.1 billion in 2022, per Insider Intelligence, but the majority of these purchases are happening because consumers are being referred on social platforms to retailers' apps and sites, versus buying on the platforms themselves, said Peter Newman, director of forecasting at Insider Intelligence. Meta and TikTok did not respond to requests for comment. Gen-Z Wants More Out of Their Social Shopping Experiences Not worth the effort for businesses Brands that have set up storefronts on Instagram have typically resulted in relatively light sales, like impulse buys or limited edition items, rather than a large basket of items retailers can expect on their sites or in-store, the first media buyer said. Reflecting this reality, anecdotal findings suggest that using Instagram ads to drive customers to a brand's Instagram shop leads to higher customer acquisition costs, than if the brand used ads directing consumers to their site, said Jim Phillips, head of growth at direct-to-consumer intelligence firm Charm, which has data on millions of DTC brands. Furthermore, setting up a shop on Instagram is a fairly heavy lift, especially for small brands, which makes setting up an Instagram storefront even less appealing if meaningful revenue is scarce, sources said. “The level of sophistication around the SMB advertisers has been relatively poor with respect to them running their own shops,” the first media buyer said. Ditto goes for live shopping, which several sources said failed to attract the consumer interest that it has in Asian markets. “Whenever we have clients try to do live shopping, they never had enough engagement and scale to set up something like that up,” said Katya Constantine, CEO of direct-to-consumer agency DigiShopGirl. “The customer is not buying on Facebook in that way.” Large brands also don’t have a huge incentive to open up storefronts on social platforms, especially given the rise of retail media and retailers' desire to own data on consumers exclusively, the first media buyer said. “Who owns this relationship?” they said. “[Retailers] are forever going to be indebted to [platforms] to pay to talk to the customer when [retailers are] bringing the store to the platform.” A lack of creator buy-in Some social commerce tools, like Instagram’s native affiliate program or live shopping, hoped to piggyback off creators’ relationships with their followings to drive sales. But creators were reluctant to adopt the tools, multiple sources said. “The platforms enrolled a lot of creators into these programs and the creators dropped out,” said Ross McCormack, vp director of social strategy at Havas Media Group. “These things aren’t going to be successful [without creators] on board.” Live shopping not only failed to catch on with consumers, it also didn’t resonate with creators. The long video format seemed at odds with the industry push toward short-form, especially on Instagram, said Megan Frantz, talent manager at influencer agency Whalar. “All these platforms have been coaching creators on how to make really good short-form video,” she said. “That doesn’t translate to an hour-long live stream.” The native affiliate program also failed to reach buy-in from creators, who mostly were already using older affiliate programs, like Like-to-Know to manage their links. “[Instagram's tag-linking affiliate program] is still really a cumbersome experience,” Frantz said, adding that it's especially annoying for creators already using another platform to manually enter multiple links to products. While buying on a social platform may be a cleaner user experience than clicking a link to go elsewhere, creators did not have enough incentive to change their workflow, Frantz said. “It’s a case of first-to-market, not necessarily best-to-market,” she said on the popularity of creators pedaling links to outside-the-app transactions. Despite Meta’s pullback from its affiliate program, creator-aided affiliate marketing is growing and is relatively recession-proof, said affiliate marketing director at PMG Digital Agency Alison Rinaldi. Frantz said 70% to 80% of her clients make a portion of their income from commerce shopping tools. It’s a glimmer of hope for the social commerce industry, proving people do want to buy from people they like and respect. But with recession rumblings and a few false starts, the era of people seamlessly buying products in the same place they post photos with their friends is a long way off. “There is a time of austerity coming,” the first media buyer said. “Social commerce is going to stay where it is.” She Got Harassed by TikTok Trolls—Then Her Brand Deals Suffered

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Why Marketers Still Aren’t Sold on Social Shopping

The pandemic commerce boom hasn't translated into purchasing on social platforms

Catherine Perloff

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Catherine Perloff