Why YouTube Is Turning to Shorts for Social Commerce

Why YouTube Is Turning to Shorts for Social Commerce

YouTube

Short-form video is an important battleground for brands and consumers right now. TikTok really changed the game for video content creation by inspiring millions of people to create TikTok videos that typically last anywhere from 10 seconds to 60 seconds. Since then, a host of imitators have appeared, including Meta’s Reels on Facebook and Instagram; and YouTube Shorts.

Many businesses have quickly cracked the code for creating short-form video, and everyday users continue to up the ante, too, which has accelerated the rise of the creator economy, or everyday creators who monetize their content with the help of the host app.

Short-form video is also rapidly evolving as a format for creating ads, free content, and shoppable experiences. The latest example: YouTube Shorts is expanding shopping features.

What Is YouTube Shorts?

Shorts is a feature available to YouTube users. With Shorts, people can quickly and easily create short videos of up to 15 seconds, similar to how TikTok and Instagram Reels are used. The videos are created on mobile devices and viewed, in portrait orientation, on mobile devices. And once a person opens one Short, they get access to tons more of them (again, think TikTok or Reels playing one after another.) According to Google, YouTube Shorts now averages over 30 billion daily views (four times as many as a year ago).

It did not take long for businesses to get involved with Shorts. As we have blogged, brands everywhere are connecting with the vast YouTube audience with organic content and advertising.

For instance, Kitchen and home marketplace Food52 is posting Shorts that offer sneak peeks at its longer-form content on the traditional version of YouTube, as well as repurposing some recipe videos. Drupely’s olive-oil brand Graza says it is creating user engagement by posting how-to cooking and recipe content. According to Graza, videos focused solely on Graza products do better on TikTok than on Shorts.

Social Commerce on Shorts

If YouTube has its way, more brands will be using Shorts to sell things to people. New shopping features are being tested by YouTube in order to accelerate social commerce on YouTube. The new shopping features allow users to purchase products as they scroll through Shorts.

In the United States, eligible creators can tag products from their own stores. Viewers in the United States, India, Brazil, Canada and Australia can see the tags and shop through the Shorts. (The plan is to expand tagging for more creators and countries.)

YouTube is also experimenting with an affiliate program in the United States. This makes it possible for creators to earn commissions through purchases of recommended products in their Shorts and regular videos. YouTube says that this test is in early days. The program will be expanded in 2023.

This is just the latest in many efforts by YouTube to inject social shopping into the user experience. For instance, YouTube launched shoppable ads and the ability to shop directly from livestreams hosted by creators. YouTube has good reason to make it easier to buy and sell products on Shorts. Shorts has topped 1.5 billion monthly users. According to gen.video, YouTube ranks third overall in terms of where consumers do their product research before buying, only behind Amazon and Google directly.

YouTube Shorts is in a race with Instagram and TikTok to win attention from shoppers. Both apps have a head start on Shorts, and TikTok is testing TikTok Shop in the United States. TikTok Shop allows users to buy products directly through the app. All of them are trying to get a slice of the social shopping pie: social commerce is expected to be a $2 trillion market by 2025.

Brands are already figuring out how to sell products via Shorts. Glossier sold products through Shorts in June by creating a challenge for users to try. Glossier gave about a hundred influencers a new pencil eyeliner and encouraged them to create Shorts videos with the hashtag #WrittenInGlossier in the caption. People who tapped the hashtag were brought to the Glossier website. There, they could buy the eyeliner and were asked to recreate a look as part of the challenge. Any Shorts video that included the hashtag was shoppable.

2023 will likely be a year for more shopping features to proliferate on video platforms, with Shorts, TikTok, and Instagram duking it out for consumers’ attention amid a recessionary economy. Who will win? We’ll report progress here.

Contact True Interactive

We deliver results for clients across all ad formats, including video and mobile. To learn how we can help you, contact us.

Why Google Is Bullish about Winning Its Fight with TikTok

How Brands Are Using YouTube Shorts

Why Google Brought Advertising to YouTube Shorts

Why YouTube Shorts Matters to Brands

Why Google Is Bullish About Winning Its Fight with TikTok

Why Google Is Bullish About Winning Its Fight with TikTok

Google YouTube

Alphabet, Google’s parent, announced third-quarter earnings that fell short of expectations. Normally an earnings miss is cause for concern especially during recessionary times. But the company sounded upbeat. In fact, Alphabet believes it’s making the right investments for long-term growth, including one crucial YouTube feature.

The Numbers

First, let’s take a look at the numbers. For the third quarter, Alphabet reported:

  • Revenue: $69.09 billion vs. $70.58 billion expected, according to Refinitiv estimates.
  • Google advertising revenue: $54.48 billion, up 2.5 percent year over year but down 3 percent between the second and third quarters. (By contrast, Google’s ad revenue jumped 43.2 percent between the second and third quarters of 2021.)
  • YouTube advertising revenue: $7.07 billion vs $7.42 billion expected, according to StreetAccount estimates.

The decline in ad revenue for YouTube is most bothersome for Google, especially because YouTube rival TikTok continues to pick up steam. Advertisers are finding something better on TikTok: younger, highly engaged audiences who prefer TikTok’s short-form video content.

According to Statista, TikTok generated $4.0 billion in advertising revenue in 2021, a figure that is expected to double by 2024 and triple by 2026.Digiday reported just a few days ago that ad agencies are shifting content creation from Instagram and YouTube to TikTok. In April, Insider Intelligence predicted that TikTok’s ad revenue will grow 184% to nearly $6 billion in 2023 (that amount tops Twitter and Snap combined). Meanwhile, Insider Intelligence says that Influencer-marketing spend on TikTok will overtake YouTube in 2024.

YouTube Is Fighting Back

But Alphabet CEO Sundar Pichai says he is confident that Google will turn things around. One reason: the company has developed an answer to TikTok.

YouTube recently launched Shorts, which is YouTube’s version of short-form TikTok videos. Shorts is basically a TikTok copycat. Using the YouTube app, people can quickly and easily create short videos of up to 15 seconds. The videos are created on mobile devices and viewed, in portrait orientation, on mobile devices. And once you open one short, you essentially access the motherlode in that videos start playing one after the other. Just swipe vertically to get from one to the next.

According to YouTube, more than 1.5 billion people use Shorts – impressive numbers that actually surpass TikTok’s user base. As a result, more brands are creating campaigns on Shorts. It’s early days for Shorts and brands, but Shorts has two big advantages over TikTok:

  • Integration with YouTube, which has 2.6 billion active users. This is important because YouTube can promote Shorts to the built-in user base, and brands can connect Shorts content to their already established YouTube presence.
  • A creator monetization program that is more favorable than TikTok’s. YouTube recently announced Shorts will soon be eligible for monetization, and creators will keep 45 percent of the revenue generated from viewership. Having more savvy and popular creators on Shorts will generate more ad revenue for YouTube – and likely attract more brands.

Shorts is a fledgling operation. It only recently launched an ad program. But in an earnings call with investors, Pichai voiced optimism that the company’s investment into Shorts will pay off. He reiterated YouTube’s commitment to Shorts monetization, challenging TikTok directly, and attracting creators to the platform.

He has one other reason to feel upbeat. TikTok continues to grapple with a recurring and very ugly issue about its possible threat to national security related to accusations of privacy breaches — an issue that flared up in 2020 and is making headlines again. Who knows how that is going to turn out?

The best course of action for YouTube is the one that the company has chosen already: answering TikTok as it has done and capitalizing on its built-in user base. This will take time, and investors are impatient, especially during a down economy. But Alphabet has the cash to ride out the down times and continue to make YouTube more appealing to advertisers and creators.

Contact True Interactive

We deliver results for clients across all ad formats, including video and mobile. To learn how we can help you, contact us.