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It’s no secret that social media platforms get the vast majority of their revenue through the sale of targeted advertising. In 2021, Meta (formerly Facebook) generated revenue of $ 117.9 billion, most of which, $ 114.9 billion, came from ads. However, while this model may have worked for the tech giants in the past, things are changing rapidly.
As the demand for privacy among consumers grows, a growing number of companies want to present themselves as advocates of personal information. In 2021, Apple introduced a new feature called App Tracking Transparency (ATT), which gives users the option to stop apps from spying on them as they switch from one app to another. A month after the feature was introduced, a whopping 96% of U.S. users opted to turn off tracking.
Related: The evolving role of social media in e-commerce
The launch of ATT not only helped Apple turn privacy into a competitive advantage (advertising for the company’s mobile app more than tripled in the six months following the launch of the feature), but also it also devastated its competitors. The fact that social networking companies can no longer track consumers across apps means they can’t target users with ads as well as they used to because they aren’t able to identify content navigation and create more accurate profiles. of the consumer. As your advertising becomes less valuable, the inevitable is happening: advertisers are retiring. According to Mark Zuckerberg, CEO of Meta, Apple’s privacy changes will result in $ 10 billion in lost sales 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 even though advertisers run away from social media, users are not going anywhere. In 2021, online users spent an average of 90 minutes on social media. It is advancing rapidly until 2022 and the daily amount of time we spend on social platforms per day has grown to 147 minutes.
Social media is a great way to share our lives with others and keep in touch with friends, but customers can also use them to learn more about brands and the products and services they sell. Many users already connect with brands on social media and 9 out of 10 say they buy from companies that follow them on social platforms. This makes them ideal platforms for brands to interact with existing and potential new customers.
Related: 5 Steps to Improving Your Social Trading Strategy
Social trade
Enter social commerce. Social commerce is a model that allows brands to sell products directly within social networking 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 Stores on Instagram, which allow users to search for and buy products on the brands ’Instagram pages, to Snapchat Shoppables, which allow users to“ try “products virtually before clicking a” Buy Now “Button to buy them. Regardless of the approach, one thing is clear: social commerce could be the best bet for the social platform to increase its revenue from here.
Social trade is an upward trend. Accenture estimates that social trade will grow three times faster than conventional trade, from $ 492 billion projected last year to $ 1.2 trillion in 2025. Charlotte Tilbury, Ray-Ban and Zimba are just some of the brands that already use social commerce to reduce friction and increase conversions. However, smaller D2C brands can benefit as well.
Augmented reality
Not only does social commerce make it easier for customers to buy products. It can also make the whole experience more enjoyable for the customer and more profitable for the brand, encouraging discovery and increasing engagement. This is especially the case for enhanced social reality experiences with augmented reality (AR), which allows users to virtually “test” products before buying. RA is a feature that buyers expect from companies. As early as 2019, three-quarters of customers said they used AR while shopping. And more than two-thirds said they would buy more often if a brand offers an RA experience.
Some social media RA experiences, such as the Instagram and Snapchat Halloween 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 aspects of haunted makeup that feature the five dolls that inhabit the house. Combined with a feature like Instagram Checkout or a “Buy Now” button, this type of filter can ask users to make spontaneous purchase decisions.
Other RA experiences allow shoppers to simply “test” items virtually while browsing stores or social media sources, helping to calm concerns about size and fit. Gucci’s partnership with Snapchat in 2020 allowed users to superimpose a digital version of Gucci shoes on their feet and then buy them immediately with a “Buy Now” button. Research shows that this type of RA use can increase conversions by 33% and reduce returns by 22%.
TikTok, the new (ish) social guy on the blog (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 product catalog online and send these ads to TikTok, which can then lead to direct purchases on the social platform. Marketers can gain additional reach by promoting these ads on TikTok with spending on media, just like on any other social platform, which increases discovery by allowing consumers to find these ads on their channels. For platforms, this model results not only in a percentage of product sales, but also in revenue from media spending by merchants.
The next natural step in this model will be to connect marketers with influencers to promote their ads and products, so that they can benefit from organic reach through their followers. Through the power of RA, influencers could even “use” these products virtually (e.g., makeup, a handbag, or even clothing), with the added benefit of saving on brands. product shipping costs. For starters, this would also promote virtual RA test filters to consumers, who could then test them themselves, take photos and videos, and share them with their friends, increasing the organic reach of brands exponentially.
Related: How augmented reality will shape the future of e-commerce
Live shopping
Live shopping, of which I wrote earlier in this article, is another growing trend on social media. These are live reproductions that can be purchased where influencers display products while interacting with the audience, who can purchase these products while watching them. Soon, RA will make live shopping much more engaging, interactive, and personal, as it will allow the public to virtually “try” these products while watching live transfers, thus increasing trust and purchase conversions.
For Meta, Apple’s ATT could have been “harmful.” But at least in 2021, Meta was seen as the leader in social commerce. Of course, just because social commerce is promoted as the “next big thing” doesn’t mean it will be able to replace 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 that social media giants are making in social commerce solutions are something to happen (earlier this year, Snapchat launched catalog shopping lenses), then we can expect this new form of buying is maintained and leads to large sales increases for brands later. Added to this are the recent economic problems caused by inflation and the logistics of e-commerce, and it is becoming increasingly clear that the incorporation of new technologies such as RA could be the key to the mass adoption of social commerce by consumers. E-commerce and RA could, in fact, become the saving grace of social media platforms.