With social media platforms including TikTok, Instagram, and Pinterest adding new commerce features – from shoppable Reels to product tagging in live-streams – brands are investing, and consumers are buying in. Consequently, social commerce is expected to be worth $1.2 trillion by 2025.
So, how can marketers create an effective social commerce strategy? Where should they start, and how can they drive success in what is becoming a competitive market? Let’s look at a few key points from Econsultancy’s Social Commerce Best Practice Guide.
The community-driven flywheel
One way that ecommerce brands can achieve key objectives is through positive reinforcing loops, or ‘flywheels’. Amazon’s growth flywheel began in part with an optimal customer experience, which in turn helps generate traffic, which then attracts more brands and sellers onto the platform. This ultimately enables Amazon to drive down prices, and further improve other elements of the customer experience, and so the cycle continues.
Another way to consider flywheels is in the context of community. This relates to the ability of a group of consumers – who are part of an actively engaged community on social media – to drive revenue and further business growth. For example, the more users that engage and interact with content (related to a shared interest or category), can increase visibility and engagement from others in that community, as well as attract new people to join, and so on. This activity can also translate directly into sales, particularly if the content involves positive product reviews.
TikTok’s Simon Hofmeister, head of vertical, ecommerce, explained at Econsultancy Live how TikTok drives this type of community-driven shopping, describing the platform as being full of “lots of niche places for people to find other people who like what they like, and who are talking about what they like in short form, snackable, entertaining, video format.” Whether the category be books, fitness, or food – there is likely to be a community that creates and promotes related content.
For brands, the first step is discovering this community. McKinsey elaborates on this concept with its community flywheel methodology, which sets out five self-reinforcing marketing strategies that can set the flywheel in motion. These strategies include, again, identifying the right community for your brand, and then using hero products to create online buzz, communicating brand values, using dazzling content to fuel conversation, and finally, enabling communities to buy via social media without friction.
Nike is a good example of a brand that has followed a community-driven approach, adapting its content to target niche communities – such as members of its Nike Run Club – and to drive overall brand engagement. Videos related to Nike Run Club have over 9.4 million views on TikTok, a large percentage of which stems from organic user generated content that feeds into the community, involving tips, advice, and information for fellow runners.
Selecting the right channel and content format
Selecting the right channel for social commerce is important for several reasons. First, marketers should consider the audience that they want to target, and how certain platforms might align with this. TikTok, for instance, is skewed towards a younger demographic, with 42% of TikTok’s global audience made up of users aged 18 to 24 as of April 2022.
Second to audience is the difference in content formats on each platform. Some, like Facebook, TikTok, and YouTube, are driven by short video, whilst the likes of Instagram and Pinterest are still focused on imagery. Additionally, content formats should also be considered in line with user behaviour (i.e., how that content is consumed). On TikTok, users are targeted based on the type of videos they naturally engage and interact with, while users on Pinterest tend to exhibit search behaviour to deliberately seek out a particular category of interest. Marketers should consider how content might best align with this – i.e., is it based around entertainment, education, activism – and how might users on social media find and interact with it?
Marketers also need to consider what their business is trying to achieve and what platform might be best for reaching these objectives. Marketers are likely reevaluating their social advertising budgets in 2023, as economic uncertainty continues. This, combined with the phasing out of third-party cookies, means that brands are increasingly looking for new ways to target users on social, with contextual targeting coming to the forefront.
Tamara Littleton, founder and CEO of The Social Element, recently told Econsultancy that TikTok Pulse – TikTok’s new contextual advertising tool – could become an appealing place for brands to allocate budget this year. “This kind of contextual advertising offering can allow brands to reach the right audiences without disrespecting the need for privacy by assessing content and placing ads accordingly,” she said. “And with TikTok agreeing to split half of the revenue with the creator whose video appeared before the ad, it’s clear that its investment in greater ad tools won’t come at the expense of what it does best- facilitating creators.”
In Econsultancy’s social commerce guide, Lauren Hannifan, Head of Brand for Snug Sofa, suggests that the end goal of social content doesn’t always have to be driving sales, with furniture brand Snug often using entertainment-based live events to drive ‘talkability.’ “It’s important to test different platforms, different formats and also different hosts when going into live-streaming. You need to find out what works for you,” she said.
Malcolm Hill, Social Commerce Director for Mindshare, also quoted in the reprot, emphasises that businesses must ensure they are ‘retail ready’ rather than solely focused on social engagement. “Have your product information available which will enable you to shape your social commerce strategy focusing on driving business outcomes,” he explained. “Make use of margin and returns rates to focus your efforts on selling products that are making an impact.”
Building a good measurement framework
Finally, building a framework for measurement is critical to social commerce success. Mindshare’s Malcolm Hill suggests that marketers should align three different types of metrics: platform metrics, business metrics, and third-party measurement analytics. When it comes to business metrics, for example, he told Econsultancy that “This involves thinking beyond last-click revenue targets and asking, ‘Is this solution growing brand awareness or product consideration?’ and ‘How is business social commerce activity impacting other channels?’”
This is also where marketing mix modelling comes in – an approach that enables marketers to measure how variable factors impact sales and ROI. Recently, Meta partnered with Deloitte on ‘Measurement 360’ – a new measurement framework which, as Meta describes, “helps advertisers utilize multiple best-in-class measurement solutions in tandem to track all components of a marketing strategy.”
While this approach is nothing new, a key part of Meta’s approach (in combatting so-called ‘signal loss’ in direct response advertising) is its focus on first-party data, which it states marketers must now lean into in order to future proof strategy. “This will require breaking down silos within organizations, such as tighter integration between IT and Marketing, to connect data collection to measurement and campaign activation,” states Deloitte.
Integrating social media into CRM systems can also help to break down these silos, enabling teams across companies to glean invaluable insights from social media interactions. In turn, data from social CRM can help brands to create more targeted and effective paid social campaigns.
To learn more about social commerce strategy, read Econsultancy’s Social Commerce Best Practice Guide.