Livestreaming: Why the Rising Star of Social Commerce is Here to Stay
Have you heard the buzz about Livestream Commerce but haven’t yet decided if it’s the right strategy for your brand? Well, you’re in the right place. This article will dive into what’s fueling this hot trend, how to maximize ROI, and why it may just have some staying power.
But first, a refresher.
Livestream Commerce is simply live shopping. Similar to home shopping TV shows (think QVC), it’s where a brand ambassador demonstrates how to use a product, and all engagement between the host and audience happens entirely in real-time.
Having gained popularity in China, live commerce is quickly gaining traction as a transformative shopping experience worldwide. The number of app installs for livestream selling grew by 61% globally between January and September 2021, compared to the same time the year before, according to The Future of Commerce report.
If you’d like a more detailed background on livestreaming check out our blog post: Why Your Brand Should Bet Big On Livestream Shopping.
4 key trends are influencing livestreaming’s popularity and driving continued growth:
1. Online Shopping Behavior: Advanced since COVID, consumers are expected to continue to migrate to online shopping, and eCommerce is projected to account for 20.4% of global retail sales by the end of 2022, up from only 10% five years ago. In other words, eCommerce is becoming more crowded, and brands must find more strategic ways to engage consumers and drive conversions.
2. Rising Advertising Costs: Advertising is more expensive and less effective. Following Apple’s privacy updates, cross-app data sharing is prohibited unless users opt-in. Consequently, advertising across Facebook and Instagram has become much less effective than before, and return on ad spend (ROAS) is decreasing. Advertising on Facebook, for example, already costs 47% more than the year before.
3. Digitally Native Consumers: GenZ, the first generation of digital natives, will be in their 20s and 30s with more disposable income. This digital generation doesn’t distinguish between their physical and digital worlds and expects new, always-connected social experiences.
4. Technology Enablement: 5G will account for half of mobile connections by 2025 and is set to unlock new experiences on and offline, further blurring our physical and digital worlds.
With the global livestreaming market projected to reach over $247 billion by 2027, more and more brands are taking notice and experimenting with ways to get onboard. This growth is undoubtedly warranted as livestreaming is proving to be an important marketing tool that allows brands to engage with and strengthen relationships with their customers, all while showing off the best aspects of the brand.
Opportunities abound for brands willing to invest in livestreaming.
➜ Educate consumers on new products and features: Livestreaming enables brands to reach consumers where they are, on the channels they enjoy, and break down barriers by walking consumers through why they should add your product(s) to their lives in a way that feels authentic and real. This platform also empowers consumers to tell brands what they need/would like this product to do, providing brands with invaluable insight into users’ pain points, needs, likes, and dislikes. Gen Z, in particular, responds well to this real-life demonstration and the ability to ask questions and get feedback in real-time.
➜ Help build communities: Livestreaming is a new form of community-based marketing that supports a direct connection with consumers and community partners regardless of geographical location. Not only can you connect with a wider, global audience, but this connection facilitates consumer-to-consumer interaction around your brand, helping to generate buzz, create better content, and build better products. Brands can maximize reach by producing one feed and sharing it across multiple platforms (e.g., retailer and social).
➜ Take conversion rates 2 to 3x higher than typical e-commerce: A key component to live selling viability as a revenue driver is its ability to leverage grassroots production and free platforms to produce sales at low costs. Don’t fall into the trap of relying on paid media to drive streams. Instead, focus on key opinion leaders (KOLs) who have a proven following, and use 70-90% of media to drive after-the-fact views on IG, YouTube, etc. Another key to enhancing conversion rates is having a unique proposition such as unique bundles, limited edition items, special discounts, and a gift with purchase.
After conducting multiple pilots across a wide range of clients, we found that, on average, sales from livestreaming commerce came back much higher than anticipated, with some brands breaking even and some even seeing positive ROI. As live selling in the U.S. and the functionality of platforms evolve, we expect to see a shift towards more robust consumer adoption and a significant boost in product sales.
For all its benefits, livestreaming is not without some key challenges.
While brands are eager to test out this space, there are some real challenges to consider, primarily because there isn’t one or a best solution. Let’s explore some of the most common challenges, along with their respective solutions.
➜ Technology Readiness: As easy and inexpensive as webcasting has become, there is still a good amount of technical setup – much more technical setup than just video recording. Plus, while brands learn how to resolve technical issues to scale using familiar platforms like Instagram, they are also required to explore new platforms, including TikTok and Snapchat.
➜ Measure the Right Metrics: Continuing to test if livestreaming is an effective commerce channel at scale also requires being able to collect and interpret relevant metrics like viewer numbers, engagement, and behaviors. This data will help brands to identify more clearly who their audiences are and how to optimize and customize their content experience.
➜ Tailor your Strategy to your Target Segment: To win in the e-commerce landscape, brands and retailers must adapt their e-commerce and marketing strategies to consumer behavior and preferences. Consumers are telling us that they prefer engaging, authentic livestream content and are not finding that in utilitarian marketplaces. We’ve also found that live selling hosts and how they sell makes a difference. Having two participants works best on screen, and engagement is the hosts’ responsibility as they interact with the chat session by addressing viewers directly with answers. When done well, on a 45-minute livestream, hosts should be able to encourage viewers to purchase every 10 to 15 minutes.
In conclusion, live selling works. We have learned that it is possible to drive sales and that live selling is a highly effective platform for building community and creating invaluable engagement between brands and consumers. We can expect live selling to enable a new form of community-based marketing that supports a direct connection with consumers to support product feedback and discovery.
Global brands have been innovating in this arena for several years, but the technology is now accessible for brands of all sizes, and the landscape is only getting more competitive. Having the right partners to help you take advantage of what this emerging space offers has become more critical than ever.
Pilot44 is your roadmap to the future of eCommerce.
Pilot44 has been helping clients, large and small, navigate the space of livestreaming. We do everything necessary to help brands coordinate the development of the pilot, complete a detailed plan, and launch.
For more actionable steps on how your brand can take advantage of livestreaming check our post Why Your Brand Should Bet Big On Livestream Shopping and get in touch to learn more.