Nest on Social Commerce: Why ignoring Meta’s Shops could destroy your brand

Written by Will Ashton, CEO at Nest

1st December, 2021

The world of social media advertising was shaken up in May this year, when Apple released the iOS 14.5 system update, directly impacting Facebook, now Meta’s, ability to gather and use data outside of their app, leading to less visibility on ad performance for advertisers on the platform. 

As a result advertisers are watching Meta closely to understand how they are going to develop and strengthen their offering across their platforms and work around the restrictions imposed by Apple to continue to be an attractive marketplace.

Facebook & Instagram Shops: Social Commerce at the forefront

In order to meet the commercial needs of advertisers, Meta is developing a ‘Social Commerce’ model across their platforms with the launch of Shops on Facebook and Instagram. This model will enable advertisers to benefit from customers purchasing directly through the Meta platforms.

At the moment, advertisers can showcase their products on Shops and raise organic awareness to drive sales through brands’ websites. But once the purchase transaction can occur in-platform both Meta and the advertiser will regain control of valuable data to improve the accuracy of the targeting and optimisation of ads.

This is hugely important. Ecommerce advertisers rely on Facebook and Instagram ads to drive a significant proportion of their overall revenue – in the majority of cases it is the number one channel. Brands that fully leverage Shops will benefit from improved tracking visibility which will help enhance ad targeting and optimisation compared to those that don’t, so Shops could drive a huge competitive advantage through stronger performance. From this perspective, engaging with Shops should be a commercial imperative for all ecommerce brands.

Challenges for Meta: Curating new consumer behaviour

In order for audiences to checkout via Shops Meta will implement their own payment system, Facebook Pay. Advertisers will potentially also be able to add this as a payment option to their websites, as with Klarna, Shop Pay, Google Pay and Apple Pay.

As there are so many payment options available, the main challenge for Meta will be user adoption of their solution especially as Apple and Google Pay are set up directly on mobile devices, which Facebook Pay isn’t.

To encourage this adoption, Meta needs to drive consumers to Shops and mold new shopping behaviour through the discovery and browsing experience. If customers don’t see the value in Shops then advertisers won’t see the value either. But as Meta has determined this is of strategic importance, you can safely assume they will ultimately place Shops more prominently in the user interface and develop the overall experience to be more attractive to its users.

Challenges for brands: Lack of customisation in Shops

A potential downside to Shops is that unlike brand websites, the user journey has limitations and is not fully customisable. On websites customers can go through a multi-stage flow and answer custom questions so the brand can gather the specifics they require. On Shops, brands with bespoke products such as tailored clothing or custom printing will be challenged to recreate their checkouts, unless Meta enables this in the future.

A similar issue is likely to arise with branding, as the Shops framework could look homogenous across all storefronts so it may be a challenge to create consistency across brand assets and ensure brand recognition.

What will Meta do next?

With the recent rebrand it’s evident Meta has ambitions that stretch far beyond the products and services it offers now. As we try to understand how Meta may develop the integration of it’s current apps in the future, it’s useful to look to WeChat, the one-stop app in China that covers messaging, posting photos/updates on your personal page, shopping, ordering food, transferring money, paying your bills and more as a potential start point.

Facebook and Instagram provide standard social media platforms where users can share photos and updates, then connect through Whatsapp and Messenger and also trade items through Marketplace. Now Meta aims to provide an end-to-end shopping experience which will strengthen their ecosystem and create more embedded stickiness.

One thing that Meta may find difficult is actually unifying all these offerings, partly because of antitrust and legislative bias in some economic regions against one company dominating the market, as demonstrated by the ongoing US Federal Trade Commission’s antitrust and anticompetitive conduct case against Facebook’s past acquisition strategy.

Ones to watch: The rise of TikTok

TikTok has seen huge growth over the past couple of years, recently surpassing 1 billion monthly active users. This is no surprise as Chinese sister app Douyin foreshadowed this success. The app is a novel source of unique and creative content and although Facebook and Instagram have attempted to compete with this offering through the introduction of Reels, they haven’t yet succeeded at producing the same quality of authentic content.

TikTok has been quick to develop their own ecommerce offering by partnering with Shopify. The key advantage TikTok has over Shops is it isn’t reliant on an owned payment solution and therefore already has transactional capabilities as an agile intermediary. Last month TikTok World saw the further launch of new commerce features, indicating they are building a serious commercial competitor to Meta’s apps.

Of course, TikTok is not yet sophisticated enough to drive consistent, stable, predictable results at scale for brands, so the naysayers say. But savvier brands know that it’s inevitable that systemised formulas for successful advertising on the platform will be developed over time – which is why brands should be investing in TikTok now, for long-term gains ahead of the curve. 

As new ways of shopping are developed across social media, it’s possible to imagine a future where shopping transactions are no longer centralised on brands’ own websites. Brands must embrace Social Commerce in order to not be left in a weaker position than competitors and start preparing a strategy to get ahead of the curve.

 
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