Social commerce is defined as using social networking websites like Facebook, Instagram and Pinterest to sell products directly. Customers purchase products in-app without ever going to the product’s website.
Consumers are becoming more comfortable with mobile payment options and the industry is growing. According to eMarketer, by 2023 there will be 1.3b mobile payment users and 80m in the United States.
We loved the Economist’s article on eCommerce in China. https://www.economist.com/leaders/2021/01/02/why-retailers-everywhere-should-look-to-china It covers how Chinese consumers see social media as much about content and connection with others as it is about shopping and payments. And shows us how behind the rest of the world is when it comes to live video commerce and the power of enabling consumers to achieve bulk discounts by organizing group purchases, which was the initial value proposition of www.groupon.com.
Facebook and Instagram have recognized this trend in social commerce and have invested heavily in the last few years to create shoppable experiences in-app.
Facebook shop and Instagram shop was released to help small businesses during the Covid-19 pandemic in May of 2020. The Facebook shop version is an update from the Facebook page shop which rolled out in 2016. Brands can create a Facebook shop for their business and customers can purchase right from the shop without ever having to go to a website.
Note - there are seller fees (5%) associated with Facebook and Instagram shops. Facebook has suspended all selling fees on purchases through June 30, 2021.
Instagram Shoppable Ads
Instagram released ads with product tags on Instagram Q4 2020. Brands and marketers can now utilize product tags in ads. Tags on products in ad images direct users to the Instagram shop to purchase directly in-app. Ads with product tags can be created as organic posts or within Ads Manager (note - available for select advertisers). Here are step by step instructions on how to create product tags as organic posts.
Instagram also reconfigured their main navigation to incorporate “Shop” at the bottom of the app further emphasizing their shift towards social commerce.
What does this mean for brands and marketers?
People spend over 2 hours a day on social networking sites on average. They are influenced by peers, celebrities and industry experts. And now they can purchase directly in-app without ever reaching your website.
Expect this shortened path to purchase to increase conversion rates by up to 50% as most conversion models we build for clients assume losing half of the audience with each click. And they also assume 50% of ad clicks yield website visits. Brands will need to tell their whole story in ads because you can no longer expect your website to be the primary tactic to drive revenue.
Creative teams will need to incorporate product imagery in Instagram ads for tagging.
Media teams will need to develop strategies that incorporate awareness and conversion to develop the brand story and convert to purchase without leaving the social media app.
Here is an example of a marketing program that does a great job using Instagram ads with product tags: Hollister saw 13% increase in CTR, 34% lower cost per impression, and 42% lower cost per click when using product tags in ads. View case study for more details.
Effective Social Commerce Marketing
Here are Effective’s 3 keys to Effectiveness:
1. Utilize Instagram ads with product tags for remarketing audiences because they are most likely to convert.
2. A/B test creative to determine what works best with product tags.
3. Incorporate a content creator in the ad to bring value and encourage purchase.
Connect with us today to build an Instagram shoppable ad program
Check out our media platform summary https://www.effectivemc.com/media-platform-management
View case studies https://www.effectivemc.com/b2c-case-studies