IAB SEA+India - An introduction to social commerce

Click to download a printable handout below.

What happens when you mobilize one of the biggest communities in the world? A shift from social media as a scaled discovery platform for consumers, to one that arms brands with an audience primed to purchase with minimal friction.

According to the 2019 Google – Temasek e-Conomy SEA report, the internet economy hit an inflexion point with online media, travel and ride-hailing users growing at an unprecedented rate. Today, Southeast Asians are the most engaged mobile users in the world with 324 million of them connecting to the internet primarily through their mobile phones. SEA’s internet economy hit $100 billion in 2019 and is expected to grow threefold to $300 billion by 2025, contributing 8.5% of the region’s GDP.

 

With strong reliance on mobile and the high penetration of social platforms (>71% of Facebook and Instagram penetration in SEA according to Global Web Index, Q2 2019), it is no wonder that social commerce has taken off so strongly in this region. According to Euromonitor, social networks as a commerce channel is highest amongst emerging market consumers under the age of 30 with the APAC leading the race.

In the context of commerce in social, while there is broad agreement that the outcome of a measurable sales conversion needs to happen:

  • When a social media channel provides referral to an eCommerce site that generates a purchase and/or
  • Conversion happens directly on the social media platform through a “buy” button designed to drive purchases with minimal friction

To help marketers navigate the social commerce space, this paper will address the following topics:

  1. Social commerce enablers: what is driving the growth of social commerce in Asia
  2. Social commerce 101: how to set up social commerce for any business

 

SOCIAL COMMERCE ENABLERS: WHAT IS DRIVING THE GROWTH OF SOCIAL COMMERCE IN ASIA

 

THE RISE OF THE CELEBRITIES AND INFLUENCERS FOR COMMERCE

 

The influence of online celebrities has formed one of the biggest shifts across eCommerce for our largest neighbour, China. The recent 11.11 mega festival in 2019 saw Taylor Swift, an internationally renowned celebrity headlining for Alibaba, where her performance was broadcast live across Alibaba’s owned properties, including Lazada, for SEA.

While it is hard to directly attribute the social influence of iconic celebrities on actual conversions, the success of the festival is evident in Alibaba reporting RMB 268 billion (USD 38.4 billion) worth of merchandise sold through Alipay on its Chinese retail platforms, including Lazada and AliExpress on 11.11 in 2019. This is nearly one third more than 2018, and 5,153 times more than what it sold at its first Singles’ Day event a decade ago (RMB 52 million).

Beyond global celebrities, we have also witnessed influencer strategies utilising micro influencers to drive external traffic marketplaces, leveraging on long-tail social strength to drive conversions.

Source: GroupM INCA

 

Partnerships with influencers have also been increasingly creative as seen in the latest 11.11 2019 Lazada activation in Singapore, collaborating with Tinder and influencers who are keen to put themselves out there in the dating scene to create content and tie in eCommerce tips around online shopping during this mega event.

 

Source: Lazada

On most platforms, brands are able to work with influencers by providing products – usually limited edition or custom products – that can be used for promotion or sales. Influencers guide their fan base to make purchases directly on their own store.

In our own backyard, we know that that Southeast Asian countries like Malaysia, Singapore, and Thailand have some of the highest rates of penetration of social media across the world, especially on Instagram.

 

Scha Alyahya, Malaysia’s top model, actress and TV host doing a series of endorsements driving to Lazada or brand’s own dot.com site

 

The biggest challenge is the selection of a social commerce influencer. Many brands have been opening up opportunities for influencers and fans to sell to their immediate network. Campaign data from influencer marketing campaigns on CastingAsia’s platform suggested that there were no correlations found between vanity metrics such as likes, comments, shares and number of followers to clicks and conversions received. The biggest correlation with clicks and conversions was observed with the type of content posted by the influencer.

Vanity metrics should be taken into consideration, but should not be used as the ultimate identifier of success. Today’s measurement capabilities allow marketers to truly understand the business impact of influencer marketing, proving that similar to online advertising, the right placement (influencer), in the right context or fit (with an influencer’s regular content), to the right audience (follower demographics), is still the best means of achieving success.

– Gavin Floyd, Deputy Head of Advertiser Engagement, AnyMind Group

The value of influencers – whose average engagement rate can stretch from a low 1% to 10% – lies in the trust they have built with their fan base over time, enabling them permission to promote products and drive sales. However, it is important to recognise that these partnership models differ to that of conventional advertising (i.e. traditional print media and TV) and can only be put into practice and achieve good results through in- depth collaborations where both parties benefit.

 

THE RISE OF COLLABORATION WITHIN SOCIAL PLATFORMS

 

Social media has traditionally owned the top of the digital marketing funnel, building awareness and storytelling. With a hugely engaged daily audience being served ads in a ‘lean-back’ environment, social was considered the ideal space to build a brand via storytelling.

That said, the industry has witnessed a gradual shift of social formats to focus on lower funnel formats in recent years that take on a more lean-forward and action-orientated behaviour.

Source: Facebook

Nonetheless, it is worthwhile noting that social does not equate to commerce. There is still a place for social in the form of storytelling and discovery, but what is blurring now is how storytelling and discovery are increasingly being commerce-enabled, reducing friction to purchase.

 

FACEBOOK COLLABORATIVE ADS

Facebook’s Collaborative Ads (formerly known as CPAS) is an example of how advertisers can link their Facebook business manager to their e-marketplace stores in Lazada, Shopee, Tiki and so forth, offering ways to foster closer data partnerships in today’s walled garden environment. Brands are able to retarget consumers from their e-marketplace stores and also advertise to consumers who are considering a similar product in the e-marketplace.

 

Source: Facebook IQ (Ads Manager Jan-Jul 2019)

 

This creates a win-win opportunity for both Facebook and e-marketplaces, where the former increases its social commerce targeting efficiency and the latter benefits from externally driven traffic.

 

New technologies such as collaborative ads makes eCommerce interesting – improved portfolio showcase, better attribution and indicative shopper behaviour is valuable for any brand builder or e-business manager looking at the full potential of eCommerce.

-Cyril Silagan, e-business Lead, Nestlé Infant Nutrition

 

To push boundaries, Facebook is currently doing alpha tests on online to offline attribution with their Collaborative Ads for Store Sales product, which aims to better connect the impact of social media ads to actual offline conversations.

 

CONVERSATIONAL COMMERCE

The inherent strength of social platforms’ ability to connect people has also opened another door to commerce, which connects conversations to purchase. In fact, people in APAC are 1.26 times more likely than the global average to interact with a brand via messaging by global standards and more than 2 in 3 in APAC say they are more likely to buy from a business they can message.

This phenomenon is observed across SEA, with Thailand being the most advanced in its usage.LINE is the biggest messaging and social platform in Thailand, where its penetration in the country is the second highest in the world after Japan, where it originated from. The launch of LINE for Enterprise further facilitates brands to communicate with consumers, fulfilling the needs of information gathering, comparisons and evaluation. Beyond LINE in SEA, social platforms such as Facebook and Instagram (powered by Facebook Messenger) have also formed partnerships with developers to help brands realise their ambitions in the conversational commerce space, including storefront management to inquiries and purchases.

 

THE RISE OF DIGITAL PAYMENTS

The rise of social commerce is not possible without commerce enablement and new payment systems. While low credit card adoption across SEA has traditionally been seen as a barrier to commerce, mobile habits have driven a new world of payments. The driving force behind the rise of cashless payments is the rise of mobile payment apps. Nearly 70% of Singaporeans have purchased something through Stripe’s payments infrastructure in 2018 – the payment gateway of Grab and CapitaLand.

Unlike mature economies, fast-growth markets did not experience an established behaviour of using credit and debit cards. Instead, they jumped from cash to more advanced payment options such as mobile apps. As super apps and mobile payment platforms become more dominant, marketers in all sectors will need to ensure their payment strategy reflects consumer behaviour and meets their differing needs and expectations.

Most younger citizens do not see mobile payments as simply a form of transaction. Instead, they expect that payment will lead to further social, information or monetary benefits. They see mobile payment as a way to receive better personalisation, make better decisions and discover new experiences.This is where social commerce really takes form.

Embedded into platforms, direct payment platforms like those in super apps, mobile access like ApplePay means that advertisers can immediately broaden offerings or deepen engagement with target segments.

 

SOCIAL COMMERCE 101: HOW TO SET UP SOCIAL COMMERCE FOR ANY BUSINESS

 

1. DEFINE YOUR TARGET AUDIENCE AND FIND THE BEST WAY TO REACH THEM ON SOCIAL MEDIA

Ideally, you should know your target audience before building out your social commerce strategy. If not, social media can help you identify your target audience by running multiple ads targeting various audiences and determining which of these audiences buy the most from your business. One useful tactic is leveraging any existing customer data you may have. Platforms like Facebook allow you to update your current customer database and find similar users through lookalike targeting.

 

2. DEFINE YOUR SOCIAL CHANNEL MIX TO DRIVE SALES

When it comes to social commerce, less is more. Pick one or two channels to start with. These channels should allow you to target your audience and driving quality traffic to your eCommerce store.

 

3. EXPLORE COLLABORATIVE ADS

If you are selling exclusively through a marketplace like Lazada or Shopee, gaining access to their audiences would be helpful. This creates the opportunity for you to retarget audiences who have landed on your store or product pages in this walled-garden environment. You would also be able to pull the catalogue feed from your store directly onto the social ad, which allows consumers to see the product you are selling directly on the post, offering a more seamless commerce experience.

 

4. CREATE ADS USING THE RIGHT FORMATS

Now that you know who you want to target and where you will find them, it is time to create some quality ads to bring this quality traffic to your website. Opt for more tactical formats like Carousel or Single image ads to drive traffic. We recommend for you to test a few types of creatives and create separate ad sets to identify the best imagery to drive sales such as creating ads that are product-led versus lifestyle. Also, be sure to pick the right Call-to-action (CTA) aligned with your conversion objective.

 

5. DEFINING YOUR BIDDING STRATEGY

This is probably the most complex part of setting up your commerce ads. You will need to define a bidding strategy that will help you drive sales for the least cost possible. Knowing your margins will allow you to define the maximum budget you may put to convert a single customer through social. If, for example, your margins are at 50% for an average basket of $100, this means you will have to cap your cost per conversion at $50 if you want to make any money on each conversion. Another element you will need to consider is the Lifetime Value (LTV) of your customers. If the value high, you can increase your Bid Cap and not make as much money on the first transaction, knowing that customers will buy more than once from you. Just ensure that your Cost per Acquisition (CPA) is lower than your LTV.

 

6. CREATE A SIMPLE RETARGETING STRATEGY TO BRING TRAFFIC BACK

Retargeting people that have landed on your website and did not convert is an underrated yet simple tactic to implement. The same pixel you have installed to track conversion on your website will be collecting the data of all users who have landed on your website without converting.

Source: Facebook

 

CONCLUSION

 

Social media giants are racing to add new capabilities to support social commerce from discovery to purchase and beyond. TikTok’s rapid rise to fame with 1 billion users is another example and they have started implementing social commerce capabilities with shoppable video tests which is forecasted to disrupt how people shop. We are all watching how eCommerce giants will gear up to this shift in eCommerce and whether they will join forces with social media giants or continue to innovate on their own. No matter what, the customer (and brand) is the winner with continually new ways to shop where and how they want.

AUTHORS & CONTRIBUTORS:
IAB SEA+India Commerce Committee

WRITTEN BY

  • Eunice Loh, Digital & Platforms Director, Southeast Asia (SEA), Wavemaker

SUPPORTED BY

  • Josh Gallagher, Chief Product Officer, Asia Pacific (APAC), MediaCom
  • Linda Lim, Chief of Advertising Partnerships & Market Development, Singapore Press Holdings
  • Mehdi Elaichouni, Senior Strategy Director, Essence
  • Michael De Silva, Lead Director, Client Strategy, The Trade Desk