Another media company has ratcheted up its eCommerce efforts: YouTube. It has formed a deal with Shopify to make more content shoppable. There are already lots of products promoted on YouTube – some of which are shoppable – but the latest brings greater ability to click and buy on the spot.
The way this works is that YouTube is configuring itself with compatibility for product tags that point to Shopify products and stores. This gives Shopify merchants – including SMBs and large brands – a wider upper funnel to attract shoppers and drive sales; while YouTube creators can derive affiliate revenue.
That last part will be the lynchpin. Financially incentivized creators will be able to add tags within their videos, which in turn let users click to browse or buy related products. So in a way, YouTube is crowdsourcing the construction of an eCommerce system through its content creators.
This is similar to TikTok Shop in that a discreet eCommerce store isn’t necessarily being built. Rather, eCommerce is weaved throughout the organic content. And it’s all tied together through a taxonomy of product tags, and the functionality to bring users to an offsite transaction and track the clickstream.
Advertising at a Party
Speaking of TikTok, one thing that jumps out from YouTube’s latest move is that it’s a direct shot at TikTok’s emerging eCommerce efforts. As noted, TikTok Shop similarly has infused eCommerce functionality through a taxonomy of product tags that permeates its content graph and social feeds.
But when looking at these two players, the key question is, which is better positioned to expand into eCommerce? Part of that comes down to context and persona. It reminds us of the Henry Blodget quote (paraphrasing): Google is like advertising at a store, while Facebook is like advertising at a party.
This quote gets to the key matter of intent. On what sites/apps are users in shopping mode, and where are they more receptive to promotional messaging – or in this case, buying something outright? Amazon scores highest on that measure, but when looking at YouTube versus TikTok, the former likely wins.
We say that as there’s ample product-centric content on YouTube – 30 billion hours last year and growing 25% annually, says YouTube. There’s also lots of how-to content (e.g., improve your golf swing), where product plugs are natural. TikTok on the other hand is a party, where shopping isn’t as welcome.
Familiar Story
Stepping back, everything is becoming shoppable. Once the exclusive domain of Amazon and a long tail of online merchants, eCommerce is infused with everything from social feeds to connected TV (CTV) programming. This isn’t just about promoted products, but transactional functions to buy on the spot.
The benefits and drivers behind this trend are fairly obvious, including greater monetization and revenue diversification. That not only applies to maturing tech giants that perpetually search for new revenue growth – a familiar story – but also a softer advertising economy for all the players listed above.
Those ad-market dynamics continue to challenge the Googles, Metas, and TikToks of the world. This is due to the combination of ad budget cutbacks throughout the land (demand) and more players to share that smaller pie (supply). Apple and Amazon’s ad revenue conquests have accelerated the latter.
So expect to see all of the above players continue to expand in all directions. Traditionally ad-supported players are getting into eCommerce, while eCommerce players like Amazon expand into advertising. That makes things increasingly competitive on both ends, which is probably a good thing ultimately.
Header Image Credit: Christian Wiediger on Unsplash
