That Social Commerce Thing is Really Going to Happen This Time, with Andrew Criezis, President at NIQ

Transcript

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Peter Crosby (00:00):

Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age. Hey everyone. Peter Crosby here from the Digital Shelf Institute. When it comes to the promise of social commerce, we have the social part down, but the commerce part is still very much a work in progress. We have news on that front. Andrew Criezis, president at NIQ recently returned from a trip to China with insights, data and experiences that foretell new social commerce experiences and formats that might just make the leap across the pond this time. And yes, of course it involves AI. Welcome back to the podcast, Andrew. We are so delighted to have you back.

Andrew Criezis (00:50):

Thanks for having me. Excited to be here.

Peter Crosby (00:52):

So today we are going to be diving into the world of KOLs or key opinion leaders and socials commerce, but specifically in China and understanding how they are shaping the next round of commerce there. And we know that China's seen dramatically, in some ways more widespread adoption of social commerce, but what are the trends that we are seeing there now and what can our audience learn from that?

Andrew Criezis (01:20):

Yeah, definitely spot on. We're seeing a huge growth in social commerce within China. In fact, this past year growing 56%, which is just again, massive numbers for a market the size of China. One of the things that we look at is from a total omnichannel, what amount of sales is taking place in China? And now social is accounting for 8% of that market. So you've got a market like China, which is one of the largest in the world. 8% of that is coming from social. So okay, that'll hit the

Peter Crosby (01:52):

Balance sheet.

Andrew Criezis (01:54):

That's more than just a dent, right? That's a bunch of big dents. So Deweyan is one in China that when you think TikTok big across the rest of the world, Deweyan is the brand of that under by dancer within China. So that's just a pure example of them growing really fast, being hyper competitive and kind of transforming social.

Peter Crosby (02:15):

And it's really a cultural experience there. I mean, it's sort of how they connect with shopping. Right. Do you have a sense of why that is? And we'll get to this in detail later, but sort of why not us and all that, but just initially really just a sense of why that is?

Andrew Criezis (02:40):

Yeah, I think there's been a big trend historically around community purchasing, community buying, trusting others around you to give you advice or even to do shopping for you. And so I think as digital has become bigger and bigger and social apps have now just gone beyond just pure social but have shops deeply embedded, it almost was a natural cultural fit for then China and other markets around in apac. To begin to have more and more key online opinion leaders or opinion leaders left and right, kind of pop up in CPG as well as tech and durables and begin to start to showcase, Hey, I'm the person who loves coming up with new recipes and always talks about organic something here. Or I'm the person who loves telling you about the latest gadgets and doing live streams. And I think that has grown massively, but it's also starting to come west. So that shift from east to west, I think you're going to start to see that we already do have in a couple platforms, but it's certainly going to continue to grow

Lauren Livak Gilbert (03:44):

That group buying. I had heard, this is probably a few years back because it's probably been going on for a while, that in China they were actually using WhatsApp to purchase as apartment buildings. So someone would say, Hey, I'm going to the grocery store, who needs this, needs that, and they group by to actually discount the cost for everyone in the apartment building. And I just can't imagine that happening in the us. Oh my

Andrew Criezis (04:09):

God. So I actually think it is a trend that's going to come here. It's going to be different though. I don't think it's necessarily going to be your neighbor who's going around and aggregating because just our communities are so different here in the US than in China and how that's structured. But I already know of companies in the US that have started to look at that model and are developing apps where you have think of instead of Instacart, where you have just a random person who's going to the store and grabbing different things for you, but maybe it's the same person. Maybe it's always Lauren who's our community person assigned through the app who's doing the shopping. And so Lauren starts to really know me. You interact with me, I begin to trust you, pick out better produce for me or whatever the products are. I do think that we're just on the cusp when you look at this true social channel selling in China, we're at least five years behind if not more community buying. We're probably even further behind. But if you think about what are the benefits cost, efficiency typically from group buying, trusted buying and time, you're getting time back. So potential.

Lauren Livak Gilbert (05:26):

I didn't know any of my neighbors when I lived in a massive building, so I did. But I like the concept, I like the concept. So when we're talking about KOLs, Andrew, talk to us about what a KOL actually is and then why it's important from a social commerce experience perspective.

Andrew Criezis (05:44):

For sure. So KOLs, key opinion leader, or typically you'll hear them as online influencers. These are individuals who either part-time or full-time, their job is to showcase various products, demo the products on a live stream. So for us here in the US that could be TikTok, could be any other social platforms. Even Amazon had those live buying, if you remember when that came out. And that person is, they're incented to help demonstrate products, sell products, and they get a percentage from a sales commission standpoint. And so the concept there is that when you're being sold to buying individual who's demonstrating the product, potentially showing you the cleaning power, or they're saying, you can trust me, I've used this product, I know this cleaning product works, or this food tastes great and my kids love it, you're more likely to trust someone in that scenario because there's this person to person interaction than it is just reading a standard PDP that says kids love this, right?

(06:48):

There's a difference when you're reading that PDP on the page and you're reading all the bullet points. Sure, good points. But if I see someone interacting with it, just like when you go into reviews on Amazon and you think through the reviews and those are people, you trust it a bit more, it's the same idea. It's just that you have individuals who, as KOLs tend to become almost specialists in certain domains. Maybe they're a technology specialist, maybe you're the food expert, maybe you're the grandma. And so everyone loves to shop or watch the grandma cook and then buy those recipes and those products. And so that role is a job. It's either a part-time job or a full-time job. And what it does from an e-commerce standpoint, digital and the way it's being used is it's driving traffic, it's driving traffic to the P two P pages, it's driving conversions, and ultimately that conversions and dollars for brands.

(07:43):

So brands are very interested to know who are the right key opinion leaders to engage with. Should I go with people who are a little bit more famous, maybe they were a star in the past, and then are also branching out into protein bars or something like that and are showcasing how to live a healthy life, or you better off going with the grandma who's got that homey mentality and people, she's probably further down in the totem pole as far as fame and followers, but has a really high conversion. So brands are definitely paying attention, brands are innovating and they're seeing the ROI.

Peter Crosby (08:19):

Can I ask in China, are they transparent that the KOL is getting a percentage of the action? Do people know when they're watching that?

Andrew Criezis (08:30):

I think it's well known, yeah, because at this point there's millions who, it's kind of not a niche anymore of where maybe there's some stars. And you kind of know in the US when someone is posting something on Instagram and they have a following of a million people, okay, they're probably getting paid for it or they'll state it there. There's actually millions of people who do this, and it is pretty well known that that's built in. That's their job. That's how they provide for themselves.

Lauren Livak Gilbert (08:56):

And how do you think about A KOL differently than an influencer? Or is it the same thing? Because I feel like we would say we have influencers here in the us but I don't know if I could confidently say I could point to a KOL unless they are a celebrity who was an athlete or X, Y, Z or a doctor.

Andrew Criezis (09:14):

Right. Yeah, no, it's a good point. I think in the western world, the idea of the influencer is typically, like you said, an athlete, someone famous from TV shows, someone that's in media and traditional media, I'll say that's typically what they're known, known for. Key opinion leader is someone who's not necessarily that. So it could just be your average gel. It could be me talking about what I like to wear or what I like to do. And I am not famous for anything. I don't have a massive following on Instagram because I was on a TV show or because I do makeup in a special way. And so it's like this huge expansion of people who have a perspective or opinion about certain products and want to show that. And then that leads to a sales cycle or a sales process. And typically they're demonstrating products. So the slight nuance there in the eastern world is that it's not just a picture of someone on Instagram who happens to have makeup and says, this is from here. But oftentimes in China, they are holding the product, they're demoing the product, they're explaining the product to you. So it's way more direct, I guess is probably the right way. It's not indirectly showcasing a product. You are directly demonstrating a product for the purpose of driving conversion or interest.

Peter Crosby (10:40):

So it's QVC is what you're saying.

Andrew Criezis (10:42):

Think of it as a digital. Yeah, our modern social QVC in a nutshell, in a TikTok world.

Lauren Livak Gilbert (10:52):

So if I'm a brand in the US and I want to hire a KOL in China to break into the market, or maybe I sell there and I want someone to do something for me, how do you find them? Is there a marketplace for them or is it really just identifying the person that makes the most sense?

Andrew Criezis (11:11):

Yeah, there's multiple ways. But Doyen as the app that you'd probably be using, you can find KOLs and you can search and try to do research. Now, what you won't have is something that tells you what we ended up doing at N iq, which was to measure conversions. So what you'll see is number of followers. So okay, you can rank and see that this person has the most followers and is super famous or has a lot of followers on this specific app, but you don't really know. Is that also a high conversion? And so one of the things that we provide brands with is to look at what we call ROI or a sales ratio, which is how expensive are they relative to their amount of followers? What you find is you might have a more efficient KOL who's maybe in the middle. They're not super high up in the number of followers, but they have a lot of engagement. So relative to what you might need to spend, that's actually the person that you should be engaging for your brand.

Peter Crosby (12:11):

So you're actually adding an additional layer of intelligence on top of that page and tell me if this is proprietary or something, but are you essentially scraping the data out of there to,

Andrew Criezis (12:26):

There are some proprietary elements, but yes, scraping is a very big piece of what a lot of businesses in China do to gain intelligence. But there's also partnerships that we have that are really important that give us access to unique sets of data. So between those different aspects, we can piece together a really strong story.

Peter Crosby (12:46):

That's fascinating. And so with all of this data and how are you seeing brands use KOL successfully?

Andrew Criezis (12:54):

Yeah, I think maybe two points to it. One, the bigger brands I think are moving the furthest ahead from they were behind and then are really pushing to catch up. So what you find on these social selling sites is that early startup brands, disruptor brands could make a huge impact on doing the same way that a startup brand here in the US and TikTok can make a really big impact by having a huge splash launch, a new beauty makeup and overnight sell out and be completely out of stock. And even if they have in-store, drive a ton of traffic to Target or wherever else in China. So small brands have been very successful because small budgets, but you get a huge amount of eyeballs. Big brands are really trying to better articulate what's their story that they can tell on social, how do you pivot that messaging and how are you different than the thousands and thousands of other brands?

(13:52):

Because in that social selling experience, it's very different than an in-store instore. You kind of control the set, you can kind of control the assortment. You've got a certain number of facings on social, there are millions of configurations and different ways that you could be showing up, and so therefore your competition is much higher. So the brands that are successful are coming across one, going after a big impact, ROI, but they're also ones that are doing it with a more authentic story. So they're connecting that social selling to, again, an opinion or a theme that's resonating with consumers. So whether it's health oriented or it's something that's going to give you an advantage in life or is better at, there's something there that they're demonstrating to consumers and doing it a little more edgy way in a social way. And so sometimes you'll see creators get really thoughtful of how they might create a video. It's not just me showcasing a product and holding it, but they'll have, brands will partner with them to say, do something special. We want to create a big splash. They'll literally create dance moves based on a product and get really, really creative with these videos. But micro movies almost, but in a 12 or 32nd burst. So that's how brands are creating a unique space for themselves and can stand out from the thousands that they now have to compete with

Peter Crosby (15:26):

The amount of effort in each engagement. And then scaling. That seems a bit daunting to me.

Andrew Criezis (15:34):

I dunno.

(15:35):

Okay. That's where another interesting that I saw. So I was in China at the beginning of Q4 last year, and we were running a digital advisory council with some of the e-commerce and digital leaders from call it about 10 or 15 major brands. And one of the brands showcased a video that they've launched, and it was actually, it's about Pampers. And what they've done is they've actually leveraged AI to create generative KOLs. So these are synthetic artificial people who on Deyan in that social TikTok app are demonstrating Pampers diapers. So the same way that I would buy diapers for my girls, my babies, they are selling diapers and they're interacting with the product. They're talking about the discounts why you should buy now, but it's completely generate, it's not a real person. And so that idea of AI coming into the world of KOL gives you potential for massive scaling. So when you get to scale, yes, to create that unique video is very hard in a manual world. But if we can get really good with generative ai, then you can start to have artificial people demonstrating showcasing products in a whole new way. And it was mind blowing to see this once I saw that a couple months ago, I just saw this pathway of where the industry is going and it was shocking.

Lauren Livak Gilbert (17:08):

But that's a whole new dynamic, right? Because it's not a real person, it's ai. So is there the same level of trust as there would be from a KOL? Does it say that it's an AI generated person? What is the reaction? Does

Andrew Criezis (17:23):

It convert to that?

Lauren Livak Gilbert (17:24):

Yeah.

Andrew Criezis (17:25):

Well, it was in Chinese, so I couldn't tell you what it said, but the Chinese team was telling me what it was saying in English, and it's actually online. I can drop a link that we can share with you.

Peter Crosby (17:36):

Oh yeah, we'll share that. That'd be great.

Andrew Criezis (17:38):

So I would say two things. One, we're all skeptical of when something after the fact is artificial. But even in the us, and you may have seen this in the news, there are already artificial people on Instagram and Facebook. That's already a real thing and you just won't know it, right? You're not going to go meet this person, but they exist digitally. So I think the blurring will get really hard to know. If I'm an advertiser, I'm not going to say artificial at the top in big bold letters, you don't really have to declare that the other

Peter Crosby (18:13):

Right now, you don't have to declare that.

Andrew Criezis (18:14):

We'll see right now you don't have to declare it

Lauren Livak Gilbert (18:17):

In the us you don't. I'm sure other countries will soon. But yes.

Andrew Criezis (18:22):

But on the flip side, I think one of the benefits of this is think about it this way. Maybe you like to be sold to in a specific way. And when someone's presenting products or a lifestyle to you, Lauren, you prefer to be sold to by a female ages 35 to 45 who are sporty, whatever it might be. And you want someone to be very short to the point on the benefits. You don't want someone who's going to talk forever to the point you're businesswoman. You need to get onto the next thing. And so you want that short, micro social selling experience that might be best for you versus maybe I want someone who's going to go into all the facts and really convince me. And so in a generative AI world, think about personal custom KOLs who are dynamically optimized to sell you the optimal product or the correct product in the right way. And that from a consumer buying standpoint is better than just a bunch of junky ads or KOLs that are just like, what is this? I don't know who this person is. And so maybe over time you do start to trust it because it's gotten so smart about what you care about.

Peter Crosby (19:35):

So I'm going to get a little deep into the weeds here. So when I think about the data and the data that's available to drive that knowledge of Lauren, because I understand predictive and behavioral analytics, no, I don't, but I know that they exist conceptually, yes, in concept, I understand what that means and I understand the product content that could also help drive those conversations. But where in predictive or behavioral analytics are we able to classify a Lauren or you as those two different kinds of people? Because to me, and I don't know if you know the answer to that, but that to me is what's fascinating because that's a new dimension I haven't thought of, this is how I want to be talked to or you know what I mean? Is that possible?

Andrew Criezis (20:32):

Well, I think about it as just another, even if you think about today's world of advertising, right? With AB testing of nuance, does Blue react better than red?

(20:43):

The same way that you could be getting two different TikTok feeds one day or two as you're scrolling through. One is showcasing a person who's really detailed and maybe it's a female, another one's a male. You're talking about a product. You can start to do a lot of AB testing on the fly and start to say, oh, well Peter clicked on this one. Maybe he didn't buy, but Peter clicks on this one more than he clicks on that one. And so you can imagine you start to develop. The other reality is that brands have an incredible amount of consumer data. And so Lauren is an individual, we already know a lot about Lauren, we know her shops, we know what sports she cares about. We know even what games she went to if she wants to sport games. So from a consumer receipt standpoint or ere receipts that even we have an NIQI could tell you if she's a Patriots fan or not a Patriots fan, there's a lot we could tell you about Lauren today, and there's a lot more we can talk about from a model standpoint that you could try to predict what Lauren would want to interact with.

(21:46):

And then once you have that, then it's about testing. And if you think about it as a marketer at a brand you are trying to hone in of how to position your product on the digital shelf to consumers. Right now it's about getting it at the best optimal position to sell more generically. But if that digital shelf in the future could become a personalized digital shelf, that I think is the future of the digital shelf for a lot of these retailers and social channels.

Peter Crosby (22:14):

Yeah, I've been using the football analogy lately that football is a game of inches, and this future of dynamic commerce that you're talking about is a game of niches. And that getting really good and it's going to take the whole ecosystem to be able to support that. When we think of the collaboration between brands and retailers, knowledge and information is going to live on two different sides and somehow they need to meet. And the requirements of these are, the retailer might know well and also the brand would, but they might have their own idea of what the personas are that should be going after and what sort of behavioral sets. But sort of merging that so that it lifts all the tide lifts all boats, I think is sort of the challenge of the future, which is giving me pathetically goosebumps as I talk about because it's exciting.

Andrew Criezis (23:07):

The good news, a lot of it today is being done in clean rooms. They're being anonymized afterwards. So it's respecting privacy and doing it the right way. But that's starting, that alignment in clean rooms has been going on and it's just going to continue to grow. And then it's really how do you scale it and automate it and then drive it in a generative AI to then drive the digital shelf experience.

Peter Crosby (23:31):

So as we talked about earlier on the podcast, Andrew, we've seen slower social commerce adoption North America, but do you feel like what you've been seeing is going and sort of the general way we've talked about commerce becoming more dynamic likely to shift that. Do you see those changes happening culturally as well as in the data?

Andrew Criezis (23:50):

I think so. I think it's been, as I was mentioned before, maybe we're five years behind, say China from a social commerce standpoint. But when you look at the penetration of TikTok, when you look at how Amazon is evolving and is testing out more social capabilities, I think as a natural progression, as consumers look to peers and look to others to influence their buying, you always say that you trust your friend or your colleague or someone who recommends a product. This is just becoming that digital format of it. And so the beautiful world of social media is going to continue to intertwine with the world of retail. And so it's still taking time, but part of it's also the apps evolving and getting smarter and coming out with more capabilities, more avenues to measure analytics, measure ROI, so that you can prove the value. And then I think there's also a big shift in the industry, which is as you drive social commerce, even if you didn't convert on say a TikTok or another social app, maybe there's a halo effect.

(24:59):

And so being able to measure properly that halo effect, which is something that we do at NIQ, and also a lot of other companies out there are starting to come up with ways to measure the halo. It'll showcase that actually there's a lot more value than just the purchase on that social app. And that's very meaningful to driving shoppers even in store. So the social side is actually very influential for driving those purchases. And if you take that step back, I think we could already say today that social is a big player in CPG and tech and durables. It's just the reporting and the analytics hasn't yet followed up with it, and then it's going to continue to grow as adoption grows.

Peter Crosby (25:42):

Wow. Well, it's a fascinating future to consider, and I love that you were able to bring us your experience from your councils in China and also hint at what's happening in the clean rooms, which maybe we can get you to talk about that another day.

Andrew Criezis (25:59):

Happy to if that's

Peter Crosby (25:59):

Legal. And thank you so much, Andrew. I think we've done a number of podcasts on live commerce and social shopping over the years. We're almost to 300 episodes. And I don't know how many of those were on that, but I feel like this does feel like a moment where it might become more possible. Lauren, you're nodding you.

Lauren Livak Gilbert (26:20):

Yeah, I think this is a pivot I do. And with AI too, I mean, it provides scale and personalization and it's becoming more acceptable. And I think it will game change in a different way than it does in China here in the us and it'll be slower for seeing it already. So I do think this is a pivot point.

Peter Crosby (26:44):

Well, if you think of the process of a shopping journey or even a B2B buying journey for that matter is you want your questions answered. And as both a consumer and a seller, you want those questions to get answered as quickly as possible. So they will click buy and then be happier because it happened fast. And there's no faster way for that to happen than in an interactive conversation with somebody who has all the information you need. And that's what we should be able to power in the future. And that's really cool. So

Andrew Criezis (27:16):

Absolutely.

Peter Crosby (27:16):

Thank you, Andrew for bringing us this latest piece in that puzzle. It's awesome to have you here.

Andrew Criezis (27:21):

Happy to be here. Thank you.

Peter Crosby (27:23):

Thanks again to Andrew for rejoining us. If you want to see that Pampers clip, head on over to the DSI LinkedIn page and you'll find it there. If you want to talk about all this stuff and more in person with hundreds of your compatriots, head on over to digital shelf summit.com and register to join us in New Orleans in April. Thanks for being part of our community.