YouTube's in-site commerce play
2022-11-14 | tags: marketplaces

Earlier today I stumbled across this tweet by The Transcript (@TheTranscript_). It's an audio excerpt of a May 2022 interview with YouTube CEO Susan Wojcicki, in which she describes the company's addition of in-site commerce.

The Transcript posted this while quote-tweeting someone else. That person had noticed YouTube's "Shop products in this video" links that run alongside the main content.

I hadn't heard of this before – I guess no one's selling merch in the videos I watch? – but YouTube's been at this since November 2021, almost a year ago:

Starting next week, YouTube will host a weeklong livestreaming event, called Holiday Stream and Shop, where select social media stars will sell their own merchandise and brand name products directly on the platform. In the coming weeks, some YouTubers will be able to hawk goods from their videos, a concept known as shoppable video. It’s all part of the company’s biggest push yet to become a shopping destination.

YouTube, part of Alphabet Inc.’s Google, has toyed with this idea for years, but its plans accelerated when the pandemic created a surge in e-commerce. The company also faces new competition in luring advertising dollars—its core business—from the likes of Amazon, which is quickly growing its ads unit.

(They've since announced a partnership with Shopify, as of July 2022.)

Getting some context

Why do I think this is such a big deal? It helps to go back to my O'Reilly Radar article on Disney+'s new ad-supported tier. I made the case that Disney+ could potentially run contextual ads – that is, ads based on the content, not the viewer – instead of the targeted, follow-you-around ads that we all know and loathe.

Contextual ads win out for two main reasons:

  1. They're usually cheaper to run. Targeted ads require teams of data scientists, plus the infrastructure to support the data collection and real-time model hosting involved in tracking a person's online activity. Contextual ads only require enough technology (or even, hand-curation) to tag the content.

  2. They steer clear of data privacy problems, since they don't require personal info. Sooner or later, we'll have real regulation around how companies may collect and use data about people. Smart companies are researching new revenue opportunities that avoid privacy traps.

I see additional perks in YouTube's in-site commerce format:

Frankly, shoppable video gets to the point: some videos don't need ads, because the video is the ad. If you've chosen to watch some influencer for makeup tips or whatever, then chances are you want to buy the products they're showing you. Shoppable video bridges that gap. And that's what good marketplaces do: they build bridges.

Haven't we seen this before?

Does this "the video is the ad" concept sound familiar? It should. Most good ideas resonate precisely because they're a slight twist on what we already know.

YouTube's shoppable video format is a twist on long-form infomercials, and shopping channels like Home Shopping Network or QVC. You see it there, you can buy it there. You've just called the on-screen number; the hosts can pretty much guarantee that you bought the item because of the advertisement-video you're watching right now.

(Infomercials may sound quaint and low-tech in an age of e-commerce and ML-driven targeted ads. But ask yourself why that format has held such staying power. I'll wait.)

The rush into data hiring

In light of the recent layoffs in the big-named tech firms

When companies ask me: "What should we do with our data?"

Why this question deserves a deeper conversation.