• Social commerce – purchases made via social media – is a huge industry in China, with sales projected to reach $363 billion in 2021.
  • Brands who use social media influencers are reporting much higher conversion rates than through traditional advertising models.
  • Here are the possible implications for the future of media and what it could mean for a post-pandemic creative economy.

In October 2020, Viya, one of China’s most popular influencers, livestreamed to over 149 million viewers on Alibaba's Taobao Live platform during the annual two-day Singles’ Day shopping event. If Viya’s audience were a country, it would be the ninth largest in the world, larger than Russia. Viewers could purchase products without leaving the TaoBao platform; her audience spent over 4.8 billion yuan ($719 million) on products she promoted. And Viya was just one of many – that day, over 66,000 livestreamers across different Chinese platforms attracted a total of 709 million viewers.

China is a powerhouse of social commerce. Sales generated from Chinese social commerce are projected to reach $363 billion in 2021, up 36% year on year and more than triple what they were in 2018. Social commerce will account for 13% of total e-commerce sales in 2021. The growth has largely been driven by two technology platforms, Alibaba and Tencent, which have successfully integrated social media, digital payment infrastructure and product discovery into their platforms. Today, they account for 90% of e-commerce, 85% of social media and 85% of the e-wallet/digital payment market in China.

Figure 1. Social commerce represents a growing share of the total e-commerce market in the US and China. (Source: E-Marketer).
Figure 1. Social commerce represents a growing share of the total e-commerce market in the US and China. (Source: E-Marketer).

Growth in digital content has changed how brands are marketed

The success of the social commerce model is starting to be replicated outside of China, in part because users across markets are simply spending more time with digital media platforms. The average time spent with digital media per user grew between 2018-2019 by 6% in the US and 8% in China. This trend was only reinforced by COVID-19 – between 2019 and 2020, average time spent increased by 12% in the US and 10% in China.

The growth of digital content consumption and content creation are closely aligned. Every minute in 2020, users uploaded 500 hours of content to YouTube, posted more than 347,000 stories on Instagram, and downloaded TikTok more than 2,700 times. For creators with the largest audiences, this equals social influence, which many have translated into commercial value for brands. Today, 70% of brands use influencers to promote their brands and 63% are planning to increase their spending on influencer marketing in 2021.

The proportion of users reporting that influencers impact their purchase decisions is as high as 40% on Twitter and 72% on Instagram. The low barriers to produce content have generated significant rewards for creators: the top 10 highest-paid YouTubers each made over $10 million in 2019. And this trend is expected to grow as global spend on influencer marketing has already surpassed ~$8 billion and will reach $15 billion by 2022.

Working with influencers is arguably more effective for a brand. Whereas traditional online display ads might achieve 4% customer conversion, livestream commerce on platforms like TaoBao translates 32% of views to items added to shopping carts. These trends have been compounded by a rise in ad-blocking and the introduction of tools by companies like Apple that reduce advertisers’ visibility into metrics that show ad conversion, which have made it harder for brands to target audiences and measure returns on digital advertising.

Is China’s model for commerce and content replicable globally?

Many of the factors driving success in China exist elsewhere, signalling that the stage may be set for global growth of commerce and content. Projections suggest that social commerce will grow at 29% annually between 2020 and 2028, a remarkable rate that will shape the future creative economy.

Figure 2. Projected growth in global social commerce. (Source: GrandView Research).
Figure 2. Projected growth in global social commerce. (Source: GrandView Research).

The first parallel is that a few key digital platforms have successfully captured large user bases and share of attention comparable to the biggest Chinese players. Instagram has 1 billion monthly active users (MAUs) worldwide, each spending on average three hours per month on the platform. Hulu has over 230 million MAUs worldwide, spending an average of 18 minutes per session. TikTok has nearly 700 million MAUs worldwide, each spending more than five hours per month on average on the platform. These networks are attractive choices for brands looking to reach new consumers and test new models of commerce.

As a result, platforms are becoming more creator and commerce friendly.
Amazon, for example, launched a programme in early 2019 allowing influencers to promote products through livestreams as a way to help merchants drive discovery. Around the same time, the company also rolled out an app to help influencers create, capture, and manage livestreams. In mid-2020, Amazon started allowing creators to earn a commission on the sales, as well as introducing a tiered system that rewards the most active streamers with better placement on the site.

This is in no small part due to the strong relationship that creators hold with their audiences – increasing their value to distributors, which are now seeking to attract creators both for their content and their followers. In 2019, Spotify signed an exclusive deal for The Joe Rogan Experience, one of the world’s most popular podcasts, which soon became Spotify’s most popular podcast of 2020. Providing an audience with reasons to stay is equally important – an area where a meaningful library of content can make a difference. After Microsoft took the video game streamer Ninja from Twitch to launch its Mixer service in 2019, an estimated 85% of Ninja’s followers came to Mixer with him, but only 6% stayed on after the first stream ended.

What is the World Economic Forum doing to measure the value in media?

The Fourth Industrial Revolution has changed the way content is produced, distributed and consumed for media companies, brands and individuals.

The media industry today is characterized by so-called "destination" and "ecosystem" media. The former are content destinations for consumers, while the latter use content as a strategic asset in a bigger portfolio of products and services. They offer relatively low-price media services as drivers to monetize other parts of their business, such as e-commerce, transactions, live experiences, affiliate sales or branded media.

Media production and distribution creates economic value along its sectoral production chains. It also does so through these ecosystems, increasingly owned and managed by "supercompetitors". How should society measure and value their impact?

This project, Value in Media, has spent a year looking at how individual consumers value destination media. It has analyzed business model strategies in the media industry, studied the extent to which these strategies align with people's preferences around payment and data management, and discussed areas for the industry to focus on in improving its value proposition to society.

Building on this research, the project is now in a second phase that attempts to measure the value that ecosystem media generate in society. It will look specifically at:

  • A cost-benefit analysis of ecosystem economics in media
  • Developing a framework for new indicators of value such as quality, innovation and consumer welfare
  • Identifying metrics that better represent the value of media to society, including its contribution to related activities such as retail, e-commerce and consumer industries

In response to the emerging opportunity, media and entertainment companies are increasingly integrating purchasing and payment capabilities, either independently or through partnerships. For example, Shopify and TikTok have established a partnership where Shopify merchants can deploy shoppable video ads on TikTok, and Hulu is transforming traditional video ads into prompts where consumers can scan QR codes or receive push notifications to their devices. Early moves such as these are expected to accelerate the fast-growing social segment of the US e-commerce market, generating $36 billion in sales in 2021.

A new category of platforms is also emerging that provides individual creators with the incentives and business infrastructure to monetize their followers directly. Substack pays some writers upfront sums to cover their first year on the platform in exchange for keeping a large proportion of the first year subscription revenue.

What does this mean for the creative economy?

Some indicators are already emerging of how these dynamics could change the creative economy. First of all, audiences appear increasingly comfortable spending money as they consume content. In the US, 48% of internet users aged 18 to 34 bought something through social commerce in 2019, with an average order size of $70. In China, the 2020 Shanghai Fashion Week was entirely livestreamed, creating opportunities for offline content to be monetized online. The growth of livestreamed staged events, including concert performances within gaming platforms, will drive new opportunities for brands and professional creators to collaborate.

To adapt, traditional distributors will invest in new capabilities that leverage the power of creators. Distributors will introduce business models that naturally support “win-win” relationships, for example through ongoing revenue share or subscriptions amortized across large global audiences. Some distributors are experimenting with ways to share equity with creators, while others are redesigning advertising systems. NBCUniversal Checkout, for example, allows commerce options to be embedded into the viewing experience, so brands can both advertise and sell on NBCU properties.

As this happens, some creators will start to bypass relationships with platforms entirely, a process that is already happening. Certain creators have started building their own sites to avoid editorial control and platform fees. Brands also see this as an opportunity to eliminate distributors as the middleman. For example, to partner with Viya, brands go through an application directly to Viya’s team and provide up to 30% commission on sales she generates. To some extent, this increases the bargaining power of top creators and a new ecosystem of agents, business partners, and brand franchises is growing up around top creators. However, most creators will continue to rely on distribution partners to reach large audiences and provide the experience and back-office support they need.

An increasing exchange of value between players
An increasing exchange of value between players.

As the convergence of commerce and content continues, the way that value is generated within media and entertainment industries will shift with it. The Value Map, introduced by the World Economic Forum and Accenture, simplifies this diverse ecosystem by illustrating the roles involved within content creation, distribution, and consumption. Commerce in content is redrawing the value map, requiring brands to re-evaluate where they invest, and forcing distributors and creators to evolve experiences, incentives, and value exchanges to strike winning collaborations.

The author would like to thank Jacqueline Liang, Nicole Kozlak and Reena Sudan from Accenture for their valuable contributions.