✍️ The big story
We’re more than a decade into the social media era and despite having huge numbers of users and a large engaged audience, the big social platforms have yet to capitalize on the opportunity for in-app commerce. That’s set to change, however, as companies like Facebook, Pinterest, TikTok, and Snap are testing out new ways of shopping directly in their apps.
The social shopping land grab
Pinterest already has a pretty robust AI-driven ads business that is designed to serve up pins and products for sale based on their searches and viewing habits. But the company plans to expand its social commerce capabilities to turn pins into purchases.
During its first-quarter earnings call, CEO Ben Silbermann said the company is “excited to begin testing seamless on-platform transactions later this year.” In the meantime, Pinterest will be testing live-streamed events in its app, which could provide another avenue for creators to sell their own products or those from sponsored brands
Facebook is also jumping on the live-streaming bandwagon with the introduction of “Live Shopping Fridays,” a weekly series of shoppable live streams from beauty and fashion brands that will run over the summer.
Meanwhile, TikTok is testing in-app shopping that will allow brands to set up shops within the app and tag their products on user videos. By doing so, it could not only enable sales to happen on the platform, but also increase ad spend as brands try to get users into their in-app storefronts.
And last but not least, Snap is enabling retailers to boost sales in its app through the use of augmented reality shops and filters. By doing so, users will be able to browse products and even potentially “try them on” without having to go to a physical store.
Getting around “do not track”
Part of the impetus for the coming shift in app-based e-commerce is the recognition from some ad-based platforms that they will have to re-orient their businesses in light of a crack down on user tracking.
That includes Apple’s App Tracking Transparency (ATT) program, which asks users to opt into being tracked but also relates to growing pushback from browsers like Chrome and Firefox that are moving to phase out third-party cookie tracking.
As Web Smith at 2PM wrote in his memo on “content fortresses” and “linear commerce”:
By upgrading its privacy practices, Apple will impair large ad networks that have grown with the help of those end users. This could potentially cripple Facebook’s current model with its new privacy demands. Apple has also opened the door to an unintentional adjustment to its privacy mandate. In doing so, the Mark Zuckerberg-led advertising company (and social network) will adopt a new way to accomplish its most critical objectives: revenue growth and user utility. Facebook will become an eCommerce company instead.
Since companies like Facebook will no longer be able to collect relevant data across third-party apps, the result will be a heavier focus on driving value within their own platforms.
As a result, there’s an imperative to integrate more of the transaction—and therefore more of the “shop experience” into the social media app itself. Here’s Ben Thompson on Facebook e-commerce post-ATT:
E-commerce, though, is about physical goods, where Apple has far fewer rules; thus Facebook smartly created Facebook Shops, and brilliantly integrated platforms like Shopify. Remember, ATT doesn’t restrict first-party tracking, so by internalizing e-commerce storefronts into the same app as the ads Facebook can track conversions perfectly — after all, it’s all first-party data.
While apps like Pinterest and Snap might not have quite as much exposure to ATT as Facebook does, they too will benefit more from purchases that happen in-app as opposed to those they seek to enable through advertising.
A shift to creators
In some ways, the shift toward e-commerce on social apps was inevitable, and a long time coming. But until recently most e-commerce support has gone to enabling brands rather than creators.
While Instagram has had a click-to-buy feature and in-app shops used by brands for a few years, for instance, Facebook’s non-ad revenue represents a drop in the bucket compared to the value of its overall advertising business.
And though it’s hardly alone, the company historically has been averse to enabling creators and influencers on its platforms to monetize their followings by restricting their ability to link out to partners or advertisers. In a story on “link-in-bio” monetization startup Beacons, TechCrunch notes:
To keep creators locked into their own platforms and forthcoming monetization schemes, social media companies don’t offer much support for embedded links, particularly on individual pieces of content. Many also restrict users to one URL in their profiles, putting pressure on creators to maximize the utility of a single link.
Increasingly, both brands and platforms recognize that creators and influencers are an effective marketing channel—and that will only become more true as companies crack down on user tracking and programmatic ads become less effective.
There’s also a recognition that in many ways, the U.S. is a decade behind China when it comes to social commerce, which explains why there’s a sudden rush to introduce “live shopping” across social channels here.
Enabling a robust social commerce solution will require more tools and support for the creators who draw audiences to social apps, and will power the interest in driving shop activity in the future. It’s not a question of when, but which platform will take the lead in growing the social commerce opportunity.
📖 What I’m reading
What robots can—and can’t—do for the old and lonely [The New Yorker]
As our population grows ever older, we’ll need to find new ways to keep elderly people’s minds engaged—particularly as more of them decide to age in place. Can robots be part of the solution?
What the ephemerality of the Web means for your hyperlinks [CJR]
Link rot is real: About a quarter of all URLs linked to on NYTimes.com were completely inaccessible, according to a Harvard research study.
Pont: Bitcoin mining uses half the energy of traditional banking [Interesting Engineering]
Counterpoint: Bitcoin miners are giving new life to old fossil-fuel power plants [WSJ]
The anxiety of influencers [Harpers]
What life is like inside a TikTok hype house.