Social commerce and the creator economy

Understanding social commerce roles

A social platform’s initial business model decisions around offerings, monetization parameters, and the roles that partnerships can play in forming and maintaining the ecosystem have long-term implications. A critical partnership opportunity for platforms can be enhancing the creator experience and providing new monetization options. These opportunities are critical to accelerating success in the social commerce ecosystem and capturing more moments of inspiration for consumers.

Commerce model archetypes for social platforms

Advertising focus

An advertising focus relies on creators developing authentic and engaging content with videos, posts, and livestreams that function as the advertisement. By directing viewers to the brand, a creator’s content attracts customer attention and connects them to a brand-owned website to make a purchase. Revenue is generated by increasing conversion effectiveness.

Transaction focus

A transactional focus allows companies to conduct e-commerce transactions directly on the platform while owning the entire purchasing funnel, from awareness to conversion. This helps companies orchestrate an end-to-end experience that maximizes results. Monetization occurs through revenue share on the final purchase.

Hybrid

With a hybrid focus, creators’ content functions like an ad, directing viewers to brand sites for purchase or transacting directly through the platform. Customers are connected to their final point of purchase either on the platform or with the brand. Revenue is generated if the advertisement increases conversion and revenue is shared for a portion of the sale.

Social commerce is here to stay and will only continue to grow, with an expected market size of $2 trillion by 2026 and a projected compound annual growth rate of more than 25 percent.¹ This growth is a product of increasing social media use though mobile devices and the rapid development of technology. Together, these forces are bringing new, engaging digital experiences to consumers.

As the social commerce ecosystem grows, we also see several new types of media channels being leveraged. The popularity of shopping live events was evident in examples like Chinese beauty influencer Li Jiaqi’s Singles’ Day shopping event, which attracted a massive audience. During the live-streamed event, Li was able to net more than 36 million views and more than $145 million in sales.²

Overall, success in the social commerce ecosystem requires ecosystem players leveraging creators, content, and communities to nudge consumers toward a particular shopping mindset. It also requires using deep consumer insights to spark engagement, impulses, and purchases for a seamless consumer experience. Platforms that consider interplay between stakeholders to create authentic and compelling shoppable media experiences will be the most successful in cultivating value this new marketplace. The enabling capabilities required to launch and maintain offerings in this marketplace are much different than what exists in-house. A smart strategy defines a holistic capability map and then informs choices about what to build, acquire, or partner with.