Social Commerce Trends: The Challenges Facing Influencer Marketing

According to a recent study commissioned by market research analysts Technavio, the global social commerce market is forecast to see average growth of 34% a year up until 2021. That will take its overall value to somewhere in the region of $166 billion. Social commerce is broadly defined as a sub-category of e-commerce in which the sale takes place within a social media website or app.

The user is not redirected to a retailer or brand’s independently-hosted e-commerce site as would have been the case in traditional social media marketing. The whole process from marketing to product or service choice, order and payment takes place within the native environment of the social media.

Facebook, Instagram, Pinterest, Snapchat and other major social media platforms and apps have been rolling out social commerce functionalities over the past couple of years. While social commerce in 2018 is still a nascent market, it is growing quickly and attracting increasing ad spend. It’s considered a key new revenue stream and central to the future growth prospects of social media companies. And one of the core social commerce trends is influencer market. However, controversies around what represents ‘best practise’ or ‘ethical’ influencer marketing and the tensions it can create between brands and social media platforms is also becoming an industry challenge.

Influencer marketing is the practise of brands paying mainstream celebrities, and regular social media account holders that have managed to attract large followings, to endorse their products or services. The most common approach to influencer marketing is the influencer sharing a post, usually involving an image in which the feature, indicating they personally use a product or service. This usually involves a tacit recommendation.

In and of itself, celebrities promoting brands is nothing new. Marketing campaigns have long used celebrity ‘brand ambassadors’ or had celebrities featuring in ads. The key difference, and one advertising standards bodies are now starting to become concerned about, is the inversion of the relationship. If a celebrity appears in an ad for a beer or clothing brand, they are featured in the brand’s ‘property’. This makes it clear it is an advertisement.

When a brand is featured via a celebrity or influencer’s social media account, the line is blurred by the brand featuring in their ‘property’. If there is no clear notification of a financial relationship, or not, between brand and influencer, the concern is followers have no way to tell if the post is a personal recommendation or an ad.

The Federal Trade Commission, the USA’s consumer regulator, recently wrote to 21 of the highest profile social media personalities that regularly feature products without providing a clear indication as to whether or not they have been financially incentivised to do so. The UK equivalent, the Advertising Standards Authority, requires that social media ads are clearly stated as such. The problem is, a lack of guidelines around what a ‘clear disclosure’ actually consists of means this is difficult to enforce. A consultation whose aim is to produce a clear set of guidelines is underway.

Influencers and social media platforms argue that the recent attention of advertising standards authorities around influencer marketing in social commerce represents a double standard. They argue that product placement in popular films and television serials, often based on commercial relationships, is prevalent and, if anything, even less clearly disclosed advertising from the point of view of those watching.

A further tension comes from the fact that while social media may benefit indirectly from e-commerce driven by influencer marketing, it means a far smaller contribution to their revenue than ads campaigns paid for directly. As social commerce developers, social media platforms are likely to eye a more defined slice of the influencer income pie. The theme is likely to form one of the most influential social commerce trends of 2018 and beyond.

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