YouTube’s shift to shopping destination begins this Christmas

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(Bloomberg): Every day, millions of viewers come to YouTube to search for the latest gadgets and beauty products promoted by the creators of the site. Most of them then go off to make a purchase, often on Amazon.com.

YouTube wants to be part of the action.

“We’re making their jobs harder,” David Katz, YouTube vice president for purchasing, said in an interview. “YouTube has a huge buying opportunity. “

Starting next week, YouTube will host a week-long live streaming event, called Holiday Stream and Shop, where some social media stars will sell their own branded merchandise and merchandise directly on the platform. In the coming weeks, some YouTubers will be able to sell products from their videos, a concept known as buyable video. It’s all part of the company’s bigger push to become a shopping destination.

YouTube, which is part of Alphabet Inc.’s Google, has played with the idea for years, but its plans accelerated when the pandemic created a surge in e-commerce. The company is also facing new competition to attract advertising dollars – its core business – from Amazon, which is rapidly expanding its advertising unit.

Last year, YouTube started asking creators to track what they showcase in footage as a first step to creating shopping features directly in videos, as Bloomberg News first reported. . This summer, YouTube hired Katz, an e-commerce veteran, and Bridget Dolan, an executive at beauty channel Sephora, to lead a new division focused on shopping.

While Americans are used to buying items featured on cable networks such as QVC and Home Shopping Network, efforts to break the online video business have mostly failed.

This is not the case in China, where the merger of social media and e-commerce has created a colossal industry. Research firm EMarketer estimates that Chinese social commerce will reach $ 352 billion this year, nearly 10 times more than the US market. With its holiday event, YouTube seeks to replicate the lucrative deals in China; One of China’s top streamers Li Jiaqi last month sold $ 1.9 billion in merchandise on the first day of Alibaba’s annual festival.

YouTube’s social media rivals – Facebook, TikTok and Snapchat – are now trying to become shopping platforms as well. Apple’s restrictions on iPhone ad targeting slowed down primary social media advertising activity. Google, though less impacted, admitted in a recent earnings call that Apple’s changes hampered YouTube ad sales, which topped $ 7.2 billion last quarter but failed to respond to Wall Street expectations.

However, YouTube has something that its US social media competitors don’t: Google’s online retail operation. The research firm recently teamed up with Shopify, Square, and others to create a sort of anti-Amazon alliance in e-commerce. YouTube will rely on Google’s commerce system to connect to merchants and delivery systems. Katz declined to share the commission rate YouTube would take on sales.

YouTube also relies on the influence of its stars. Many of them have created successful businesses selling merchandise on their YouTube channels through web links.

Over 4 million people subscribe to Patrick Starr’s YouTube channel, where he posts beauty tutorials and was able to make money by inserting links to product pages on the video’s description in the video description. other websites. People were so interested in Starr’s opinion that he created his own beauty line, One / Size. Most people go to physical stores to buy Starr videos products. But the share of people who buy products online has increased.

“It was jumping through hoops for consumers to go to a separate website,” Starr said. Now, Starr will be able to integrate commercial links into his video and plans to test the live-shopping feature this month at the red carpet premiere of “House of Gucci”, Ridley Scott’s new tycoat film. of fashion.

For the holiday live broadcast event, YouTube signed up Starr and other creators with large audiences, including the Merrell Twins, Gordon Ramsay and MrBeast. YouTube announced that they will be selling items from Verizon, Samsung, and Walmart. These stars are a key part of YouTube’s pitch to brands that it is better to sell through the video site than to go to Amazon.

“We have these creators who are so knowledgeable and passionate, but they’re also interpersonal and real,” said Dolan, managing director of YouTube Shopping. “All of this is missing on some larger platforms.”

As a first step, YouTube will limit its shopping service to tech and beauty items. Katz said the deal would only start with physical goods, but could expand to digital items, and he hasn’t ruled out selling cryptocurrency forward.

Despite this big commercial push, YouTube has tried to curb consumerism on another big part of its site: children’s content. Last month, YouTube announced that it would begin removing ads from children’s channels that are “very commercial.” YouTube was fined by the government in 2019 for violating children’s privacy with its targeted ads, and some big kids stars have come under scrutiny for overt commerce. YouTube’s Dolan said “kid-centric” videos were not in the company’s immediate roadmap for its shopping functionality.

Other than that, Katz said there was no category he would exclude. “I can’t think of one off the top of my head,” he said.

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