Transcript
Our transcripts are generated by AI. Please excuse any typos and if you have any specific questions please email info@digitalshelfinstitute.org.
Speaker 1 (00:00):
Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.
Speaker 2 (00:16):
Hey everyone. Peter Crosby here from the Digital Shelf Institute. So Gartner has this thing called a hype cycle, where tech goes from a peak of inflated expectations to the trough of disillusionment to the plateau of productivity. And I feel like social commerce just keeps careening back and forth from the peak to the trough. Could talk's new shopping investments represent a moment where over the next few years we break through to the plateau? Well, Taylor Siegel, associate director of Commerce client services at M R M Commerce, who leads the social commerce practice there, drop by to Phil, Lauren, AK Gilbert, and me in on the present and future of making money on TikTok. So Taylor, thank you so much for being with us on the podcast today. We're just delighted to have you here.
Speaker 3 (01:05):
Thank you. I'm so excited to be here. And talk a little bit more with you about the topic. We're about to dive into
Speaker 2 (01:10):
Social commerce, which has been on a, I feel like a roller coaster ride for the past several years as every channel and brand is trying to figure out what it means to them and how do they make money at it and how do they create experiences that adds up to great experiences for everyone. And specifically TikTok, which I know you have an interest in. So on average users spend an hour and a half on the app per day, which is astonishing to me. Maybe it shouldn't be, but that's just a lot of time, which obviously creates a lot of opportunity potentially for brands as a way to connect with their current and future shoppers. So with all of that engagement that could be business and TikTok is investing mightily in the shopping capability these days. Is TikTok kind of the new Amazon for younger generations or how do you sort of think about it and how are you seeing brands work in this environment?
Speaker 3 (02:15):
Yeah, so definitely the app success really can be attributed to its entertainment driven and authentic videos. I know I spend hours on the algorithm because it just keeps feeding amazing content to me and it really allows now anyone and everyone or any product to have the ability to go viral. And so there's really no argument that TikTok is an absolute powerhouse when it comes to selling. You can ask Lululemon, Charlotte, Tilbury, Dyson, and even some of those self-published authors who are now on the bestseller list because their books and their products have sold out in seconds because they've gone viral on TikTok. It's just really interesting too because the power of TikTok has organically kind of shifted into this new future where they're really trying to occupy spaces of the e-commerce landscape and market share because of the way that the consumer is really kind of reacting to the app itself. So you find that now TikTok is making a run towards money against Google when it comes to search, and that also can be said about regular e-commerce channels, other social networks, but Amazon like we just mentioned too, where it's really starting to play in a different space that now has them as a competitor set for the future of Amazon as we kind of move forward into this new unchartered territory.
Speaker 2 (03:37):
So the behavior is that, I'm sorry, I just was curious. So TikTok users are going there and searching for brands for products. Is that what you're seeing in the new search terms? And that's relatively new, at least at the scale that we're seeing now. Is that true?
Speaker 3 (03:54):
Yes. So in the last year or so, I think there was a study that came out in 2021 that is showing the younger generation specifically or Gen Z is using TikTok as a search engine that is surpassing Google, which just shows the nature of just behavior changes with the demographics and shifts in the generation to come. So we have that. And then we also have the ability now that TikTok recently announced that they're going to dabble in paid search, which is a force for social networks. And I think really exciting at first when we would talk to clients on our end, we would talk about hacking search. So we would say, let's hire a ton of really amazing influencers and creators and brand ambassadors that range from macro to micro and be able to serve up based on search terms, products or content so that when people are searching specifically Gen Z or millennials, that those types of products that surface organically. Now it's shifting where there's now this opportunity to have paid search, which really I think will take market share not only just in terms of views and search in general organically, but also market share from advertisers who are now going to shift those dollars from Google and search there to start playing around and testing with search on something like TikTok.
Speaker 4 (05:13):
And how are you seeing that TikTok is getting into the commerce space where you can actually go and purchase? I know they've really kind of expanded into that and so that's why they're also driving a lot of competition with the Amazons of the world. How are they getting into that and how are brands working with them to make that transaction possible?
Speaker 3 (05:32):
It's really interesting. I think that if you asked TikTok originally what they set out to do, I don't think Congress was in their five-year strategy or maybe it was, I don't know. I think that it's just the nature of how behaviors have shifted and consumers are now looking for entertainment and entertainment that actually is shoppable, which TikTok serves perfectly. And so they're starting to really experiment with different ways to do shopping on the app and how to be very similar to what we're seeing in China with the super app and WeChat and how everything can be done within that one place. So they've tried a bunch of different pilots and now they have recently rolled out shops, which is their main commerce feature and something they're putting a lot of their efforts and money into. And they rolled out actually recently to GA general, everyone within the US to be able to use this new type of feature. As of I think last week it was, but it's really exciting because what they've done is they've really been able to have shopping stay within the app and not only have just purchase, but also things like chat and even promotions that exist within this new feature. And if you are a brand and you want to start selling on TikTok and experimenting with it, it's a great opportunity for you to reach new consumers and just try something new to see how those consumers are responding to shopping in a new channel.
Speaker 2 (06:58):
So if I can ask a little bit, I'd like to go back to the search experience a little bit because at least in my mind, the beauty of TikTok was its authenticity is its authenticity. Even when it's coming from people that might be a paid creator or something, they still have to put the effort in, they have to fake their authenticity super well. And I'm just wondering in a search context, the traditional experience for that as you get these ads at the top of the thing before you get to the information that you really want, is TikTok approaching those search results in this paid program in a different way to keep it feeling TikTok or is it kind of No, that's what you get when you get paid ads, you get an ad.
Speaker 3 (07:45):
I think no matter what, TikTok is not going to abandon the idea that the whole entire app is based on authentic video creation. That doesn't feel like an ad. I think the whole experience of the feed and the for you pages on TikTok when you're scrolling, the best types of ads don't feel like ads. They feel organic to the app. And that's why I think that there's whole entire shift in terms of actually hiring teams if you're a brand that are so TikTok specific because it's a very different type of content that lives on TikTok than it does on other apps. And I think it's a special type of skill that is really starting to evolve not just between brands but creators and people are still experimenting with what actually works and what doesn't. And I think the same could be said about paid ads as it will be about search still not going to be, and I don't know because I haven't seen what the intricacies of this new program is, but I still assume that it will look very similar to the app in itself with a paid ad. It would probably just have a sponsor tag in it or ad tag in it or something along those lines where
(08:52):
Before you probably on Google, it's probably a lot more visible that it's a sponsored ad because it's really all only text, right? There's no visuals. And I think that's why people are so excited about having the ability to search on an app like TikTok because of the visuals.
Speaker 4 (09:08):
And I can imagine that Instagram really proved out that that is a viable option. I know I've been targeted by many an Instagram ad and probably bought things I didn't need. So I'm sure that's a great way
Speaker 2 (09:21):
Probably Lauren, I mean
Speaker 4 (09:22):
I definitely have, I'm right there with you at home right now. Yeah. So I'm assuming that they are using that similar kind of model where it's like, Hey, I'm giving you some sort of visual or a video to explain and then I can click to get to the product from that actual post.
Speaker 3 (09:41):
I think that's exactly right. I think that they are definitely taking a page out of the Instagram book out of Facebook. Anything that has to do with showing content visually is where TikTok plays. And I think they even do it better than Instagram. I think they do it better than all the other apps because of the nature and the algorithm that's associated with TikTok. But absolutely.
Speaker 2 (10:03):
And you've also, I think that TikTok has also made sort of a move from just being a storefront for brands to actually setting up a marketplace kind of experience. Is that true? Are the rumors
Speaker 3 (10:16):
True? Yes, that is what I have been reading and seeing and talking to a couple people in industry about that. That's the move that TikTok is making and that's why I think it's so comparable to competing with an Amazon or another type of marketplace globally because they are starting to set up infrastructure and different features that are going to play a competitive nature against an Amazon and what they have going for them right now. So you see TikTok creating a marketplace. You see them creating their own products, which is very similar to Amazon Basics. And you see them doing this not only just in terms of press and news announcements, but they're also doing this in terms of LinkedIn. You look up who they're hiring for, they're hiring for people with merchandising and global supply chain experience. And those types of people are going to start laying down the groundwork for the future of a strategy that is going to be like Amazon on TikTok.
Speaker 2 (11:17):
And I mean recently I saw an article in Insider, the TikTok shop is expected to lose over half a billion dollars in the US this year. And when you think about that, that's a lot. And particularly in this time where you see a lot of companies are reducing their level of experimentation and investment. So I'm presuming that for them to do this, that's the end game that they're seeing, which is they're something of a scale of an Amazon in terms of their commerce levels and maybe even providing services around and sort of diversifying what they're doing. Do you feel like it's sustainable for them to keep doing that level of investment in this environment? Do you have any insights into, or is it just the big bet that by dance is making?
Speaker 3 (12:13):
I think they're experimenting in a lot of places to see what bites and different areas, different markets are going to adopt different types of commerce features that TikTok ISS rolling out just based on the culture and the nuances of each of those regions. So they are losing a lot of money in shops, and it's specifically within the US and other markets that are similar in the west because I think they put in all this money based on the data and the success that we've seen in China and other areas in Southeast Asia where social commerce and shopping within the app is just exploding. And there was a big bet to replicate that in other markets. And I think what they found was that those markets weren't ready for it, and all this money was put into these types of features. And it wasn't just TikTok, it was meta as well, and even Snap and YouTube to try to start experimenting it and though the adoption was low, I still think it's needed for companies at that scale that are so innovative and at the cutting edge of all things that kind of keep driving the commerce world and the social world and everything like that forward because they need to experiment otherwise they're not going to get anywhere.
(13:29):
So I think that they're definitely putting a lot of money in these areas, but at the same time, it's not for no reason. I think that they're learning a lot and they're going to take all those learnings and reiterate it over and over again until they can find the secret sauce, whether that's the Amazon lookalike or if that's the Google search paid program or even the shops features and the conversational commerce aspect of the app where they're going to find what works in each place and eventually they're going to start pushing it forward and having it be super successful.
Speaker 2 (14:05):
Yeah, I expect that. And as you know, our audience are the brands that are trying to figure out how to make experiences that engage consumers. And so dive into a couple of examples for us. How are brands using some of these capabilities to leverage TikTok into business?
Speaker 3 (14:26):
Well, I think it's really important for brands who are experimenting the space to really think marketers where you have to be strategic and you have to put your dollars in places that work based on data and science, but also start really creating content like creators, like the brand ambassadors like your everyday consumer who are on that app. So it does feel very organic and to take that creative lens on how you can start selling product and leveraging shoppable moments that feel really natural to the app. So for instance, I love the example of Scrub Daddy because it has just one or two SKUs, right? It's a really small amount of product that they have, and yet they've amassed a major following on TikTok. They were part of the first initial pilot where they rolled out shops in the US where they started experimenting with how they could be selling the product online.
(15:17):
I thought that their content team is spectacular and the fact that they join conversations and trends versus being bystanders within the app environment, but they're one of the ones that I look at as being really successful and leaders in the space when you talk about social commerce and different types of ways that brands can really be creative and also sell product. So that's the first one. I think that a few other ones that kind of popped to or pop into my mind, Gushers I think is great. I was watching a video the other day of somebody on their team who took Gushers and instead of just talking about the product, they did something really creative and they glued the gushers to a set of Crocs as if they were the Gibbs, which are really popular right now, and walked around and it was this whole video.
(16:09):
And I thought it was just a really interesting way to stay really relevant within not only the app but the consumer and just it was really entertaining and that stuck in my head. And even though it's not directly commerce, the idea that that could be still in my head days later has me thinking about gushers the next time that I go to a store and maybe not purchasing online, but it has associated purchase intent. Other brands that come to mind to you are Red Bull Elf does an amazing job in terms of selling and kind of promoting their product on TikTok, Oreos. I know Aldi also kind of sticks out in my mind, revolve from a retail setting, does a fantastic job of having all of their brand ambassadors across all of different areas, try on their clothing and really have the most up-to-date sounds that are part of it because sound is so important to the app and really just be on trend and contribute to the conversation is so important within something like TikTok.
Speaker 4 (17:06):
From the retail side, how does Aldi use TikTok? How are they? That's one that kind of stood out to me that I wouldn't have expected from the retail side. What are they doing?
Speaker 3 (17:16):
So Aldi is doing just really clean things about new limited editions that are being sold within. So they're just kind of being part of the conversation and staying relevant because you wouldn't expect someone like Aldi to be kind of on TikTok and doing well, but they also just have a strategic point of view and have jumped into using sounds that are relevant or just being really comical and kind of up to date on everything that has been going on within the app. And I find it very refreshing to see something that doesn't feel so add forward or that is so about, I don't know the whole entire store, but it's actually about the products and how they're using them and different recipes and just I think that they're doing a really great job of trying to figure out what their secret sauce is when it comes to how retailers and those types of grocers can play in a place like TikTok.
Speaker 4 (18:06):
I love how you started talking about the example saying that you need to think a brand marketer, and I think this comes back to brand in general where TikTok can help you build a brand and help kind of get your name out there to be remembered next time you're in store. You were talking about Gushers, but I don't necessarily think that that's always top of mind when it comes to digital or e-commerce, especially when you're thinking about making a sale or a paid ad. And I feel like TikTok is that opportunity for brands to really focus again on the brand and get to the consumer and how are they approaching it? What are they thinking about how to build that brand voice and that brand vision. So would you suggest if I'm a brand manufacturer listening and I want to get involved in TikTok to really think about it that way versus, Hey, I'm going to drive incremental sales on the new marketplace feature. It's more about building that brand voice in a different way.
Speaker 3 (19:00):
Yeah, I don't think you can go in to TikTok with the main K P I of driving sales right now, especially if you're a US brand, especially if you're in C P G. Yes, brand is so important. I think when you have something as strong as a brand voice on a place like TikTok that feels really relevant, the sales will come and how that works is that really great content I think pulls a consumer in, but then the features that pushes the consumer through to make a sale. So yes, you have to have the great content originally, but then you have to set up the backend and all those features for success. So that means leveraging every single commerce opportunity you can from shops to different paid solutions, but also connecting your products to the app to also connect your commerce to the app to be able to have the backend work so seamlessly that it really creates a great experience for that consumer where it doesn't stop at the brand content, it continues to that sale. And I also think that's what TikTok does really well. I think in the future, we've always thought about the shopping journey as being so siloed. We have it start at awareness and ends at conversion or even loyalty one step later. But what TikTok is really doing is consolidating the customer journey into one kind of experience. And I think that that is something really interesting to pay attention to where brand and conversion are now kind of smudged together and they kind of equal each other if you're doing it.
Speaker 2 (20:28):
So Taylor, we always talk on this show about people process, technology that the tech is, and in this case the TikTok platform is kind of the last thing to think about. It's more like when I think of the process to bring your brand to life on TikTok, how are you seeing your think about how much of that expertise is in-house, how much of it is with an agency? What's the model that works best in such a turbulent environment like TikTok, which is innovating all the time and knowing what's where are you seeing, are there sort of maturity paths that people are taking on TikTok where some of your clients are really investing in in-house teams and then others are relying on you or can you kind of explain those different paths to me?
Speaker 3 (21:20):
Yeah, I think it just depends on the size of your business and
(21:24):
What your business is. We have clients who are really big retail clients who cater to the Gen Z audience and they've decided to bring their TikTok and social media teams in-house because they feel like they want it to be constantly creating content in the office and that have that behind the scenes aspect of everything. But I actually feel like right now most of the clients I see are outsourcing that because they don't really understand it, but they still want to be part of the conversation. So they want to use an agency to also really learn because you want to go to the experts first to really kind of get that foundation of what should we be doing, what's best practices, what are other brands doing that these agencies are working with? How can we be leveraging everything at our fingertips to create the best type of content?
(22:10):
Then also have that connectivity with experience and technology. And a lot of times because TikTok is so new that it really is something that brands are starting to experiment with where they don't want to start hiring everyone internally to build out this new feature or this new channel, but they want to start using agencies to dip their toes in it. And eventually I think that brands will start having large TikTok teams. I think that they're going to be as big as a whole marketing team will be social. Whereas right now, I think if you go to a lot of big brands that their social team is usually about maybe two to 10 people. I know when I worked at Bloomingdale's at the time, we had a small team. It's a big company, and so that is going to eventually change as TikTok and social gets so much more important to the overall e-commerce ecosystem and branding ecosystem. And as we start learning more about what works and what doesn't
Speaker 2 (23:10):
And are you seeing because is that mostly the brand side of the marketing teams? Because when it comes to what our folks are doing, they're often on the e-commerce side of the house, but they're getting sort of brand impressions through e-commerce ads, and so there's now a mixture of an interest from the brand side and how they're spending their dollars there. They get through an Amazon, they're getting brand awareness, but it's also about driving sales on that platform. As you see TikTok do more and more shopping experiences, are you seeing sort of e-commerce people get involved in the conversation or is it still very much the brand teams and whatever happens over from a driving dollars perspective is just sort of gravy at the moment?
Speaker 3 (23:59):
I think that the best type of strategy is to include commerce in all those conversations because we are seeing that where everything was so siloed before, just the nature of how commerce is moving forward is really just starting to be more intertwined. So we have commerce teams that are focused on driving R O I and sales and conversion, but that at the same time is very important to the brand team now because you're creating all these ads that are not converting. So what do you do with that? Who's going to be the person there that's going to also help with the strategy? How are you going to read that data? I know it's working. It's not, and I'm finding that a lot of different brands, especially from a governance structure, don't know what to do anymore with where they're supposed to put all these different types of skill sets and
Speaker 2 (24:50):
Types
Speaker 3 (24:51):
Of people who originally were so siloed into brand or so siloed into social or commerce. And now that it's one place, I think that there's going to be a huge mix up when you turn inward on a brand and say, how are you structuring your team? And I think that we are not going to find the same structure that is from one brand to another the way we used to at all.
Speaker 2 (25:16):
Because I would imagine if you're going to build a team of 20 people doing this, it'd freaking better be ringing cash registers or you're not getting those 20 people. Yeah,
Speaker 3 (25:27):
Exactly. I think that nowadays too with especially everything that's happening with the economy inflation, that it's not enough to have great awareness anymore. Brands just want at the end of the day to make money.
Speaker 4 (25:40):
I always wonder when brands are like, oh, we're siloed and we don't have the collaboration. I'm like, well, that can solve a lot of your problems because bringing in analytics, you're bringing in sales, you're bringing in marketing to really kind of get that full funnel picture. So I agree that it's going to continue to get even more important and that if you're dealing with social or you're dealing with creative, you need to have a seat at the table when you're talking about commerce to make sure that you can pull that full picture together.
Speaker 3 (26:07):
Yes. I love the idea too. I was talking to a couple of brands who are experimenting with the idea of having just pods, just different pods that are associated with the type of business or family of product or something along those lines where they're having one representative from each of the teams that we're talking about. So you have a commerce person, you have a creative, you have a performance marketing, and all those people kind of contribute to one team. I think that the pods are really important because you have one person that's coming from creative.
Speaker 4 (26:37):
It's very much the agile methodology kind of approach. I'm seeing a lot of brands take that as well. We're seeing from an organization structure that e-commerce and commerce in general is being democratized throughout the business, and that's the model that's being built where instead of having a c o e, you have the pods or you have an agile squad or whatever you call it that focuses on each of your brands and you bring the expertise from every single piece of the omnichannel journey so that everyone's focusing on it together and you can kind of see it from end to end. So I love that approach because that's definitely where more of the mature brands are moving as
Speaker 3 (27:13):
Well. Yeah, exactly. I think we start talking about creative commerce as being a whole new area.
Speaker 2 (27:20):
So Taylor, to close out a little bit of a crystal ball time here that I'll ask you to do some crystal ball gazing for us. Earlier you mentioned that TikTok was trying a certain to bring the model from China and other countries over into the west, if you will, and then was finding it's not working because, and I think I'm quoting you because we aren't there yet. When you think about the next few years, do you feel like it's just that we aren't mature enough or do you feel like fundamentally our cultures are different and maybe even our core infrastructure may not change in a way that would allow what China has created in their society, and if so, why not? I'm just sort of wondering where you think over the next few years, our audience largely brand manufacturers and the English speaking world should think about what the next few years have in store.
Speaker 3 (28:24):
That is the big debate, right?
Speaker 2 (28:26):
Solve it. You're here. Yes.
Speaker 3 (28:30):
I think that originally when social camp Commerce came on the scene, everyone thought it was going to explode everywhere, right?
Speaker 2 (28:38):
Yeah.
Speaker 3 (28:38):
We had it as a big buzzword and everyone was putting social commerce into every thought leadership paper and conversation and building out teams, especially on the agency side that now will kind of fit into what clients are asking for when it comes to social and social commerce. I do think that the US is very slow in adoption, especially when it comes to commerce, which means that sales aren't really moving the needle on social just yet, and that means that brands are still hesitant to put efforts and money into that new channel. Consumers are still using TikTok as a discovery app in the moment, and I think that has to do with, compared to China, there's a level of trust. That being said, the younger generation is on TikTok, they're on social, they are buying things from social, they are digitally native, they're digitally native group and demographic.
(29:35):
That is going to have a huge influence in the next couple of years, especially as consumer behaviors continue to shift as we buy more on digital, as these apps really start evolving and becoming more seamless. I know in the future, meta and TikTok are changing their advertising policies now, keep more of consumers within the app to sell versus pushing them outside the app. That's going to have a lot of difference in terms of how people are being able to buy within or without. But overall, I think it's going to be a slow and steady rise of social commerce. I don't think it's going to be one day we're all shopping from TikTok or Instagram or Facebook. It's going to be every day. We're making small strides until one day,
Speaker 2 (30:20):
Well, we'll schedule for 10 years from now.
Speaker 3 (30:23):
Your crystal ball prediction, Lauren,
Speaker 2 (30:25):
And I'll be here. I'll be here in my wheelchair and we will have this conversation if I remember. Taylor, thank you so much. It's exciting times. I think first of all, I would imagine for all the teams that work on this, it must be super fun just to be able to dip your toe and to build out. It's a fresh place to do your brand and there's a lot of innovation. And so for brands that are up for that, it is kind of fun to play in there at a time when other things are getting kind of repetitive and stayed. I don't know. I would imagine it's a great place to play as long as you're setting up the feedback loops to figure out how it's going to turn into business and you can do it in a way that is that smart test and learn agile strategy. Does that make sense?
Speaker 3 (31:18):
It's never a dull day.
Speaker 2 (31:19):
Yeah,
Speaker 3 (31:20):
That's for sure. And I think that's what makes it so exciting.
Speaker 2 (31:26):
Yeah. Well, thank you for taking time out of your exciting day doing social commerce to talk to us about this. I was curious where I'd gone and it's really exciting and fun to think about. So thank you for joining us
Speaker 3 (31:40):
And thank you for having me. This has been great.
Speaker 2 (31:43):
Thanks again to Taylor for the insights on the trajectory of social commerce. For more on what's coming, become a member by going to digital shelf institute.org and click the Become a Member button. Thanks for being part of our community.
