Part I: Forging the Future of Retail Through Strength
If 2020 was a year of unprecedented disruption and 2021 was the year that necessitated business agility in order to survive and thrive, then 2022 is most certainly the year of turning resilience into undeniable strength. This series is a peek behind the curtain of eight key initiatives that the January Digital consulting team is guiding leading retail, CPG and grocery brands to embrace and excel at in 2022. It will be a year that's data rich and place agnostic — from unified shopping experiences to selling through livestream to entering the metaverse. It will be a chance to leverage all of the customer-centric learnings, capabilities and services you've been painstakingly building over the past two years to emerge stronger than ever. Up first, I will unpack why this will be a year of embracing new media channels and selling on new platforms.
Media Mix Diversification Offsets Rising Ad Costs
Following accelerated e-commerce growth since 2020, digital advertising costs have continued to rise year-over-year — increasing 25 percent in 2021 and projected to increase another 14 percent in 2022. Specifically, Facebook and Instagram have seen the largest rise in CPMs. As costs have risen on legacy digital channels with heightened privacy concerns, it's critical to diversify media spend away from the traditional digital advertising giants of Google, Facebook, and Amazon.com.
So what are key channels of diversification in 2022? Brands poised to keep up with shifting consumer media consumption and shopping behaviors will be positioned to thrive within TikTok, digital TV, native display and streaming audio.
Specifically, TikTok will reach 755 million monthly users in 2022, after seeing 59.8 percent growth in 2020, followed by 40.8 percent growth in 2021. In 2021, the share of people who were exposed to ads on TikTok nearly doubled, to 37 percent from 19 percent the previous year. By rolling out new features like TikTok Shopping and Livestream Shopping events, TikTok is positioning itself as a serious competitor against legacy social players. In order to maximize brand investment, it's important to understand channel tone to create synergistic and engaging ads that feel representative to organic content.
While many brands have probably already tested digital TV, the rise of premiere content on streaming platforms will continue to attract premiere advertisers, leading to more ad dollars flowing to these platforms. Connected TV (CTV) continues to dominate, making up 86 percent of consumers. What’s more, CTV ads actually breakthrough to the consumer with 46 percent ad recall for streaming TV streaming vs. 33 percent for social media ads. The prevalence of "Second Screen" behavior presents an exciting opportunity for brands to further engage CTV viewers during the ads. Incorporating QR codes and shoppable opportunities can have a significant impact, with Amazon, Netflix, and NBC all rolling out shoppable features.
Social Commerce Becomes No. 1 Marketing Focus
After accelerated growth, largely due to the COVID-19 pandemic, social commerce is becoming a crucial element of the e-commerce ecosystem. In 2020, the United States was home to approximately 79 million social buyers. By 2025, this figure is forecast to grow by almost 37 percent, amounting to nearly $80 billion in social commerce and accounting for over 5 percent of U.S. retail e-commerce sales. To note, 62 percent of consumers aged 13-39 want to purchase directly from their feeds. This figure is only expected to grow as platforms continue to roll out new features to enhance click-to-buy experiences.
While Facebook and Instagram are currently the frontrunners for social commerce sales, due to established products like Facebook Shops and Instagram Shopping, Pinterest and TikTok are continuing to invest in their offerings, affording brands additional opportunities to engage and convert customers. With the hashtag #TikTokMadeMeBuyIt raking in a whopping 7 billion views on TikTok, the platform’s new shopping feature will be valuable in establishing itself as a leader in the social commerce space.
Social commerce should be seen as an extension of e-commerce, and if they haven’t already, brands must invest in tools to ensure product catalogs are correctly migrated to the platform at all times. Instagram Shopping allows brands to customize their storefronts and upload engaging creative assets into PDPs — like video — to elevate the shopping experience. And YouTube, TikTok and Pinterest all have shoppable ad formats that will likely become organic features over time. For more sophisticated brands, utilizing features like chatbots within social platforms will also create a more familiar experience for customers and serve as a valuable conversion tool to reduce the age-old drop-off.
Brands and retailers will need to quickly evaluate what’s working (and what’s not) and drop the unnecessary weight in order to become better, faster, stronger and ultimately more profitable. However, it's vital to identify the opportunities that will make the most impact and align with your unique business and marketing objectives. From livestreaming to personalization to the metaverse, check back in soon to reveal all of the critical insights to accelerate your brand and lead with purpose in 2022.
Tierney Wilson is senior vice president, client strategy and consulting at January Digital, a digital leadership company that solves business challenges through media, analytics and strategic consulting.
Tierney Wilson is SVP, Client Strategy and Consulting, leads strategic leadership for all client services employees and clients. In her role Wilson is also responsible for the consulting practice which accounts for the agency’s largest area of growth. Prior to her role as SVP, Wilson served January Digital as its Managing Director and Director of Digital Strategy. Before joining the agency, she helped lead e-commerce for Dutch LLC (Joie, Current/Elliott and Equipment), Tory Burch and spent time at Condé Nast.