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The Walled Gardens of Social Commerce

Shopping + social platforms = social commerce. It’s not a new concept in other parts of the world; as of 2022, over 70 percent of Asian consumers, specifically in Thailand, China, and Vietnam, had shopped on social media platforms. To put this into perspective, just 36 percent of U.S. internet users are social buyers, meaning around 90 million U.S. consumers have bought on at least one platform. Social commerce is a newer marketing strategy in the U.S., but one that’s growing quickly — with an upward trajectory expected in the next few years. Platforms like TikTok and Instagram are leading the charge as their user counts grow.

But there lies one main challenge: While social commerce is an obvious marketing strategy for almost all brands, it’s also causing brands to give up some of their own power — the purchase data behind transactions.

Last year, my colleague at Razorfish wrote about this problem. Today, I’m going to look at what brands should be doing to get creative in their efforts to mitigate the gaps. I’ll touch on how brands can drive more transparency in a relatively opaque system, and how marketers should be bolstering first-party data and owned experiences to help round out a social commerce strategy.

Social Commerce: The Future of Brands and Consumers

Shopping directly on social media platforms is a core feature of e-commerce, and one that’s rapidly growing in the U.S. In 2021, $37 billion in goods and services were purchased through social commerce channels, with the number expected to be near $80 billion in 2025.

And social commerce is proving to be a great success for the brands that do it successfully. Many have worked with platforms like TikTok to create new relationships with consumers, shifting from traditional advertising to fun, engaging content that’s less promotional and more focused on the experience.

But as the previous article explains, as social platforms become the conduit between the shopper and the brand, brands often lose visibility in these engagements, making it more challenging to accurately track performance across their full data ecosystem. While social commerce is crucial in finding shoppers where they already are, it provides a great obstacle — marketers and brands don’t have a clear picture of all the data.

Less Data, More Problems

While great for consumers, social commerce has effectively become a walled garden in itself. Platforms like Pinterest, Snapchat, and Instagram are not obligated to share purchase data with brands, resulting in less transparency compared to direct-to-consumer methods.

As such, brands must rely on their own first-party data to fill in these missing gaps. Leveraging the customer data that brands already have at their fingertips will drive revenue and profit through loyalty, personalization and marketing decisions. Brands also need to understand their own marketing orchestration programs and investment levels across different platforms to be able to accurately proxy purchases. Having these insights and level of understanding will allow marketers to use this data in conjunction with first-party data to understand social commerce performance relative to other conversion channels.

With Google’s cookie deprecation now underway, the crucial need for strong first-party data is already front and center.

Replicating Social Commerce’s Global Success in the US

The evolution of social commerce in Asia is extraordinary, with China representing $132 billion in goods and services purchased through livestream shopping in 2021, or 5 percent of total e-commerce gross merchandise value (GMV). Because consumers are both discovering and purchasing products on social channels, creating a successful integrated consumer experience is crucial for brands operating in the U.S., as more users flock to these platforms to shop.

Brands should work with social platforms and creators to create advertising that’s more organic and efficient. Measuring the impact of their creator/influencer campaigns throughout the advertising funnel, including engagement rates and video views, will help to understand how content is performing and what leads to conversions. This data can then be applied against first-party data sets to create a more holistic view of the consumer.

While a heavy focus of social commerce relies on influencers and celebrities, brands should also prioritize drawing consumers back to their owned-and-operated channels with engaging and innovative content. This direct line of communication provides the ability for brands to connect with users, answer questions, and develop a new sales channel. Again, filling the transparency gap within social commerce.

The Future is Social

Social commerce will continue to gain traction, both globally and within the U.S., as new generations of shoppers flock to the platforms. As more creators and celebrities partner with brands, consumers will follow with their wallets — a one-stop-shop without ever leaving the app.

A secret weapon for brand marketers to engage and connect with consumers, those that understand this new form of shopping, and how to adapt it to their own marketing strategies, will thrive in a social-commerce led world. Those that fail to acknowledge the shift from traditional, website-based shopping will be left at a disadvantage, as consumers seek convenience, ease and personalization.

Sisi Zhang is chief data and analytics officer at Razorfish where she focuses on business impact with data-driven offerings, implementing standardization processes, elevating data instrumentation capabilities to simplify client needs, and empowering her team’s niche and rich expertise.

Originally Appeared Here

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