Social commerce growth exploded in 2020 as consumers spent an average of 4 hours per day on their mobile devices. The increasing monetization of social media is now transforming the way consumers interact with advertising by integrating shoppable content directly into livestreams and helping their users build out digital storefronts. Many of the new features being implemented by the western social media giants follow in the footsteps of what has already worked in China, the world’s largest social commerce market – one that is currently 10x larger than than its US equivalent.
Though some antitrust worries loom for Facebook and Google, you wouldn’t know it from many analyst ratings.
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Social commerce is on the rise, fueled by dramatic growth in screen time on mobile devices, as well as increasingly interactive advertisements and digital storefronts.
According to App Annie’s annual “State of Mobile” industry report, mobile app downloads grew by 7% year-over-year to a record 218 billion in 2020. That compliments Sensor Tower data showing annual consumer spending on mobile apps and games surpassed $100 billion globally. It was the first time consumers spent as much in a single year.
Illustrating the growing shift from traditional advertising to mobile-based social commerce, application usage in the US surged ahead of the time spent watching live TV in 2020. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours on their mobile device.
As TechCrunch highlighted, Android users alone spent 3.5 trillion minutes using apps on their devices throughout the year.
The Holiday season was a breakout one for mobile shopping, likely boosted by the pandemic’s drag on brick-and-mortar retail. Shopping via smartphone increased by 25% to $3.6 billion, comprising 40% of all online spending on Black Friday, according to research from Adobe Analytics. On Cyber Monday, consumers spent about $10.8 billion online, and mobile purchases comprised 37% of overall sales, according to another Adobe report.
The war for dominance in the social commerce marketplace right now is primarily being waged by Facebook and TikTok.
Facebook, the world’s biggest social media company, has been bolstered by a return in ad growth rates to pre-COVID levels and a holiday shopping boost from its new “social commerce” features.
In October, TikTok partnered with Shopify to allow its merchants to sell their products on TikTok by way of shoppable video ads, even if they didn’t have a strong presence on the platform yet. Shortly after, Facebook rolled out shopping tools in their own TikTok copycat service, Reels – hosted on Instagram.
While CNN reports that it took less than six months for Instagram’s clone of Snapchat’s “stories” feature to catch up to its rival’s audience size, eventually being credited with stunting Snapchat’s user growth back in 2017, Reels has not been able to dent TikTok’s user base in the same way. Though Facebook is yet to release any data on Reels, one scroll through Instagram’s Reels feed shows that it is largely a home for reposted TikToks, many of which bear the company’s watermark.
Snapchat has also launched Spotlight, their own copycat of TikTok. As of January 2021, Snap claims the service has 100 million users.
Google’s development of a TikTok competitor, currently known as YouTube Shorts, is also underway. For now, it’s beta testing is currently aimed solely at the Indian market, where TikTok is banned.
Though nobody has been able to compete with TikTok in the popular short-form video market, Facebook and others have managed to pull out ahead of the company on advertising and livestreaming….