Blurring the Lines Between Content and Commerce

Signals and recommendations from people around us have always been important drivers for what we buy.

That's still true, but as we spend more time online, the people we receive those signals from change; broaden. Less from friends around us and more from content creators we follow online.

This happens as we keep getting bombarded with marketing emails and ads online. Consumers are getting tired of self-serving marketing spiels from companies and brands. We want signals from people we look up to and/or care about.

Content = Vertical Product Discovery

Consuming content from creators online is like a proxy for vertical product discovery for consumers:

We navigate twists and turns of content into the depths of the niche interests each of us cares about. Along the way, the content creators we follow directly or indirectly expose products to us. Which, in turn, might create a spark of inspiration. Trigger purchase intent.

People are less likely to think, "I need new sneakers," and go to Google to type in that search (horizontal discovery).

Instead, it's more likely that person is browsing through content from people they follow and comes across a pair of sneakers they think are cool. Sparks.

Decoupled activities

Consuming content and engaging in commerce are decoupled, siloed online activities. At the same time, content is becoming an increasingly important top-of-funnel for commerce.

In most cases, pursuing a purchase intent from content requires the consumer to break from the current flow (consume content) and seek to start an entirely new flow (initiate commerce). It's not very efficient or organic. It's cumbersome and paved with friction. Every day, a meaningful amount of potential transaction value gets lost in this gap.

The gap between these two activities will close. We refer to that transition as "social commerce." In simple terms, it means weaving together content and commerce experiences online. It enables users to traverse content consumption and commerce organically and without friction.

Retail tech companies like Flagship are blazing the trail by creating the infrastructure to support this "people as storefronts" thesis.

In practice, it could work something like this:

• Browse content from a favorite creator.

• See a product you like

• Click through to the storefront of the creator.

• You're now at a personal, curated store with products pulled in from different brands and companies that the content creator likes.

• You buy what you want.

• The creator might receive a kickback for the revenue they generated.

Social Commerce breeds stronger customer relationships

The rise of Social Commerce will reach way beyond the current scope of "influencers push products through content."

In the future, we'll have interfaces that enable anyone that creates content to couple that with the product. A future version of your Instagram profile page can have a content feed and a related, curated product feed, pulling products from different online stores. Social commerce will push commerce towards focusing on products as the atomic units of online commerce. Those units will be curated, aggregated, and embedded into content experiences.

When demand for a product arises from your content, and someone clicks through your connected storefront to buy, you get a share of that value through an affiliate fee, rewards, or some other incentive.

Brands sharing value capture with creators become the customer acquisition cost of social commerce. 

From property rent to digital ad spend to revenue share. Brands have to pay to acquire customers, but the direction of that rake change over time.  

Consumers are already creating value for brands through content. Social commerce will enable anyone to capture some of that value organically.

For some, it will be tiny numbers on the board. For others, people that enjoy creating content and are good at it, it can quickly turn into organic side hustles.

Another perspective is that it's more economically beneficial for both brands and customers because the value currently leaking to third-party ad platforms is instead retained in the brand-customer relationship.

The Social Commerce trend has several tailwinds that will accelerate it in the next few years.

The Current Thing is Becoming Less Effective

One tailwind is the incentive brands; e-commerce stores must find new channels to reach and acquire customers. Customer acquisition costs of "traditional" digital ads are steadily increasing.

While the internet is a place for abundance, available space for digital ads is not limitless. The demand for ad space far outweighs the supply. The price of ads increase and the ROI for brands decrease.

This dynamic will naturally push more brands towards seeking new and better ways to reach customers.

This will further accelerate as new generations of consumers enter the market with little interest and regard for email as a medium. Leaving brands in an interesting squeeze where one primary distribution channel is becoming too expensive (ads), and the other becomes irrelevant (email).

Social Commerce on Crypto Rails

Another tailwind is the new commerce capabilities that web3/crypto enables. Commerce on crypto rails will be massive.

The open standards of NFTs and tokens, an interoperable identity layer, and a publicly accessible data layer will enable

• Automatic affiliate tracking

• Programmable rewards, incentives, and real-time value transfer

• Potential for brand ecosystems to retain value inside the ecosystem by rewarding brand-tokens instead of fiat

• Customizable, composable and embeddable commerce experiences

In the next few years, we’ll see a shift towards headless online stores, as the focus shifts to products as the atomic unit of importance. And that unit will be distributed through a fragmented set of creator channels.

Web3 technology will serve as the integration interface and connective tissue between all these experiences and touch points.

My original plan for this post was to explore the following question:

How will social commerce's rise impact how we sell access to live entertainment experiences and destinations?

I didn't get that far, so stay tuned for a follow-up post soon!