As the tech boom of the past five years comes to a mellowed plateau the biggest questions on investors hands is how do we monetize this swelling user base. Certain giants, such as twitter have seen shaky stock prices as they tried to find a way to monetize their base.
Many in the e-commerce space think that a great deal of these sites such as Pinterest will earn the majority of their money in driving consumers to the checkout. Statistics show Pinterest is already king in this regard. This has spurned the advent of social commerce in the past few years, which is the conflation of social media and e-commerce.
Social Commerce offers very unique opportunities for brands. Simply speaking, banner ads are on the out. In fact, the browser add-on adblock is used by over a million people worldwide. When activated, it hides all banner ads for users. This has sparked a large moral debate on the internet since many receive content for free due to advertising.
Nevertheless, advertising online as we know it is completely shifting. Advertisers are now shifting towards more integrated content and affiliate marketing has had a massive boost in the last year or so.
The reason affiliate marketing is so effective in that it works off a trusted influence. We all make close to 10 brand mentions a day. Think of how you found out about your hairdresser, dog walker or favourite restaurant. These valuable recommendations drive the buyer to the checkout with more confidence. Brands are looking to capitalize on it in multiple ways. Websites such as Framestr allow users to share products with friends and earn a cash commission if a sale is made. Once a user has a commission they can either withdraw it or transfer it to a friend. Other sites such as Amazon employ this sort of tactic to drive sales among multiple social circles.
There is also a large focus from brands on what they dub “influencers”. This was normally limited to celebrities but nowadays a shoe blogger can have just the same amount of impact. While they may not have the same amount of fans as say a Paris Hilton, they might have a highly engaged base which follows their advice on trends. Many integrate affiliate commission systems into posts like Framestr allows so that they can open up an additional stream for themselves. Nowadays, the revenue off display ads doesn’t tend to be enough for a blogger to sustain themselves financially.
The other great thing about social commerce is that it is highly targeted for a specialized niche. I might be able to interact on Pinterest with other users who enjoy Dog fashion products. That small niche may have multiple advertising options for advertisers in this arena. They are paying a high premium for these very targeted eyeballs.
It will be interested to see the manner in which brands shift to adapt to social commerce over the next little while. It’s a difficult landscape which is yet to be fully explored.
To learn more about social commerce and Framestr's E-Commerce platform check it out here