YouTube is perhaps the most well-positioned platform, considering it is owned by Google, whose search advertising is still considered one of the best ways to reach a consumer while they are actively looking for products.
In the past five months, YouTube has become the most effective advertising channel for creating sales conversions, overtaking Facebook as the top platform, according to Rachel Tipograph, CEO and founder of MikMak, an e-commerce measurement platform. MikMak has worked with consumer product brands like Hershey’s, Colgate and Unilever to analyze the impact of digital marketing and e-commerce.
Conversions are measured when a marketing campaign leads directly to a sale or other action. “You have to think about how developed the ad platform is, because with commerce you specifically need the ability to do niche targeting as well as retargeting to drive the sale,” Tipograph says.
With advances like digital storefronts and more targeting capabilities coming to apps like TikTok and Snapchat, they will only rise in the minds of marketers.
Unlikely TikTok star
“The place that you’re really experiencing organic commerce right now is TikTok,” Tipograph says. “The power of influence there is unlike anything I’ve ever seen in my entire career.”
Hidden Valley Ranch dressing might be an unlikely TikTok star, but if someone searches the app for “#ranch,” about 1.1 billion videos appear. A portion of those videos are more literally about country “ranch” living, but plenty are devoted to lovers of the creamy dipping sauce, too.
“Ranch is absolutely a trend,” says Deb Crandall, studio leader at The Clorox Co. “There is tons of great content on TikTok, you can get lost in there for hours on the ranch thread alone. I would say it’s surprising, but I actually can’t say that anymore.”
The Clorox Co. has had sales success during the pandemic, with consumers needing its cleaning supplies and food products while in lockdowns. But with social media activity, Hidden Valley is making new sales connections. This year it started paying to promote its online merch store through advertising, driving people from social media to products, which is a rare direct-to-consumer link for a brand that usually sells on other retailers’ sites like Walmart and Kroger.
“We do think tapping into that passion, which is one of the main reasons why we even have the Ranch Shop, is a great way to grow our brand,” Crandall says. “So it builds our equity with consumers, and we’ve seen tremendous growth of this brand and this business over the past year.”
One way Hidden Valley has seen the direct impact from social media is it sold out of limited-edition, personalized ranch dressing bottles. The offering was promoted in collaborations with mid-tier TikTok stars, a modest ad budget, and ads on TikTok and Twitter. Over the 2020 holidays, Hidden Valley sold 4,000 personalized bottles, and when they brought back the promotion for Valentine’s Day, it sold 2,000 bottles in four days.
“In the beginning we focused on earned media coverage,” Crandall says. “Now that we’ve seen what just putting a little paid support behind it can do, it is something we will lean more on.”
Social commerce is expected to reach $36.09 billion in the U.S. in 2021, up 35%, according to a February report from eMarketer. In 2020, social commerce grew 38%, or almost twice as fast as eMarketer originally projected. The research firm credited Instagram, TikTok, Pinterest and Snapchat with the surge in digital retail sales.
The reality is though, despite the desire to bring shopping right into these platforms, the sales are mostly still happening off-site. For a brand like Hidden Valley, sales still most often occur on retail sites like Kroger, Walmart and Amazon.
“We’re less interested in standing up our own direct-to-consumer site right now, so we will often advertise our products, but we link back to our retail partners,” Crandall says.
Social media and live-streaming video within the apps have become popular shopper marketing tools. Walmart, for instance, has held video sales events in partnership with TikTok. Sarah Marzano, senior principal analyst at Gartner, says these activities became popular during the pandemic when shopping in stores was out of the question. But it’s unclear if that’s going to last.
“People were kind of missing that notion of product discovery and they were getting inspiration from some of the digital shopping and live streaming, to bring that fun element of shopping to people when they were stuck at home,” Marzano says. “It remains to be seen how this surge in interest for live-streaming [shopping] settles once people start going back to stores.”
There is another reason social apps want to get closer to retailers, though: Apple updated its iPhone software with privacy notices that give consumers the option to block apps from tracking internet activity from website to website. One of the biggest impacts of that change is that it makes it harder to measure when an ad on one app leads to a sale on another.
Without the ability to follow that digital trail, social media companies want consumers to go from discovering products to purchasing directly within their platforms. This would allow the platforms to prove their value, and retain customer data, too.
Publishers like Condé Nast see the power of digital retail and are crafting their content strategies accordingly. In May, Condé launched a new “shoppable” category of shows like “7 Days 7 Looks,” “Beauty Secrets” and “Grooming Gods,” through publications like Vogue and GQ. The shows will allow viewers to purchase products being featured through links on Conde’s own sites and social platforms, including YouTube.
“Look at brands like Hermés, which had a tremendous amount of success and growth in e-commerce during this period of time,” says Pam Drucker Mann, global chief revenue officer and president of U.S. revenue at Condé Nast. “Distribution in e-commerce has picked up a lot for the luxury market, so what does that create in content? I think that creates a huge opportunity.”
Marzano points to Kate Spade, the designer brand owned by Tapestry, as one of the retailers making the shift to the digital commerce economy.
The company reported 700,000 new customers through e-commerce channels and triple-digit growth in digital sales in the first quarter of the year.
“They were able to see kind of a direct impact and momentum from these videos on TikTok to their product sales,” Marzano says.