Image source @ Visual China
Even if Musk succeeds in marrying Twitter, he will not be a winner.
Because he is far away on the other side of the ocean, the anxiety of China's cross-border e-commerce sellers will soon infect him.
Since the new policy of privacy protection for IOS and Andriod systems, the cost of online marketing for cross-border enterprises has risen all the way. Especially on social media, some sellers reported to Ebang Dynamics that in the past six months and half a year, an obvious feeling is that the conversion rate has plummeted.
The chain reaction has led to an increasingly difficult business for Chinese cross-border e-commerce companies. In the past 10 years, overseas social media represented by Facebook, Instagram and Twitter have become the most important traffic reliance of cross-border e-commerce sellers with their ability to quickly locate potential audiences and quickly reach target user groups.
At present, due to the consideration of data security, the operating systems of mobile terminals such as mobile phones and tablets have begun to continuously restrict the data retrieval of these social apps, and their bottlenecks also mean the bottlenecks of merchants.
"The flow depressions that cross the border to the sea have completely disappeared." The companies surveyed agreed that this may be a huge inflection point for cross-border e-commerce, whether it is Amazon or independent stations.
For this reason, Zuckerberg has been anxious for a long time.
Before Apple's iOS privacy policy to chase targeted advertising, after the first 18 years of daily active users fell and net profit fell, Facebook parent company Meta stock price fell epicly, the market value evaporated by $232 billion.
Did Musk foresee all this?
1. The price increase when the advertisement fails
"Not as big as before" is the seller's impression of the current social stream.
An industry insider said that after the strict implementation of the iOS privacy policy, the data that sellers see in the delivery background is not so accurate. "For example, 10 orders were paid for $1,000, but only 3 orders were recorded in the advertising background. It's confusing, causing sellers to not know how much to put in or who to market. ”
"Media have their life cycle, the social media advertising system has been running for more than 10 years, the dividend is definitely getting less and less, even if it is still valid, but the marginal benefit of every new $1 spent is decaying." The implementation of the new privacy policy of iOS will inevitably usher in a more obvious decline in its advertising effect, with higher costs and lower ROI. The founder of an overseas marketing company pointed out to Ebang Dynamics, "For example, the original cost of 20 US dollars can measure a product, and now it may cost 100-120 US dollars to do it, because the data is unstable, you need to invest more to judge whether it is ok." ”
The game between the two giants of Apple and Meta has directly caused cross-border e-commerce sellers to lose "one leg" in the past in the way of selling goods of "big data selection + social media advertising measurement". Even Zuckerberg admits: "A clear trend is that we have less and less data to use to deliver personalized advertising." ”
The founder of the above company also pointed out that if combined with the 2022 policy of some social media giants, the most affected are those cross-border e-commerce customers who take the explosive product route and do the station group model.
A seller who does the station group model frankly said: "In recent months, the instability of Facebook traffic has indeed become more obvious, the single volume has fluctuated greatly, we have an independent station that has been doing for more than a year, and some stations have hundreds of thousands of orders a month." ”
Some insiders said that in 2021, the average unit price of Facebook ads increased by 24% year-on-year, which made many sellers start to consider investing in Facebook's advertising budget, partially transferred to other platforms.
A marketing leader of a cross-border e-commerce company said bluntly: "It turns out that our promotion budget on social networks and Google basically accounts for 50% each, but it will be dynamically adjusted according to ROI, if the social media effect declines, it will increase the proportion of Google, and we will also try TikTok these new platforms." ”
Some advertising service providers pointed out that under today's situation, customers will be encouraged to gradually "de-effect advertising" and spend more budgets on event marketing and brand communication to do longer-line delivery.
The more far-reaching part is that cross-border e-commerce is in an irrational market expectation. A large number of cross-border enterprises are seeking the transformation of brands with "low cost structure of social media traffic + China's high-quality supply chain".
It is equivalent to the model of "Little Red Book/Douyin + New Consumer Brand". Social media is easier to capture the hearts of young people, and it is also easier to spread word of mouth, compared to traditional media advertising and search advertising, social traffic is friendly to building a brand from 0 to 1.
In addition, due to the natural digital nature of social media, all delivery effects can be measured. This also provides a very scientific and rational growth method for brands to go global. But the door is likely to close.
"The iOS14 privacy policy is not only affecting established social giants such as Facebook, Instagram, and Twitter, but new video ads such as TikTok may be damaged, but other forms of advertising can be carried." In addition, in recent months, various social media platforms and three-party advertising companies have successively output targeted solutions, and cross-border e-commerce sellers do not have to panic too much. The above-mentioned advertising service provider said.
Common Thread Collective, an e-commerce brand growth research company, pointed out that the iOS14 privacy policy restricts the collection of third-party data, or will make e-commerce sellers pay more and more attention to the induction and mining of one-party data.
A manager of an e-commerce data protection company said: "Sellers rely too much on third-party data and third-party social media delivery, and they do not mine their own first-party data enough, and even do not know how to use it." ”
He suggested that sellers dig deeper into one-party data, such as adding real-time pop-up windows in the store, inviting users to join members, and subsequently increasing customer lifetime value through email marketing.
02. Who can solve the urgent need?
Despite the decline in social media advertising, one cross-border e-commerce seller said they are still an important channel that cannot be avoided.
"Generally speaking, the unit price of the product is less than 100 US dollars, especially those with a unit price of less than 50 US dollars, which will be mainly based on Facebook, and those with higher unit prices and longer purchase decision chains will be dominated by Google." According to the category, clothing, 3Cs are basically Based on Facebook, of which the Facebook + Instagram budget of clothing will account for more than 70%. An overseas marketing service provider pointed out.
However, more and more people choose to watch short videos instead of graphics, which is a big challenge for Meta and the merchants who rely on it to get traffic. The growth threats that Meta faces from video platforms such as TikTok and YouTube cannot be ignored.
According to the 2021 Internet Development Review Report released by Cloudflare, TikTok surpassed Google to win the 2021 global Internet traffic champion and the champion of social media traffic rankings. In 2020, Facebook also ranked second in the global website traffic rankings, and TikTok ranked seventh.
In addition to user attention and time, TikTok is also capturing the younger user base that Meta craves. According to statista, about 25 percent of TikTok U.S. users are between the ages of 10-18, compared with just 3 percent of Facebook U.S. users under the age of 18. Only 11% of TikTok users over the age of 50 are over the age of 50, while 22.1% of Facebook users are over the age of 55.
One of the current problems is that although TikTok' advertising revenue is also increasing as a rising social star, compared with mature advertising platforms such as Facebook and Instagram, merchants have greater challenges in advertising on TikTok. "In terms of the cost of a thousand exhibitions (CPM), Facebook is three or four times more expensive than TikTok, but the current ROI performance of TikTok is indeed not satisfactory, it is suitable for product promotion, and the effect of carrying goods is not enough." A cross-border seller said.
In this case, some sellers have their sights on Reels, an important layout for Meta to counter TikTok.
In August 2020, Meta launched the short video product Reels (as a feature embedded in the Instagram app, and later connected to Facebook), and made it the "first investment and development focus" in 2022, gradually introducing it to the global market. Meta pointed out that Reels is currently the fastest growing form of content in Meta and has become an important driver of the growth of Instagram users' usage time.
The only question is, is Reels, standing on Meta's shoulders, competent for the new traffic channel of cross-border e-commerce?
"Reels is seen as a clone of TikTok, and many of the features are similar to TikTok, but fundamentally, the differences that exist between platforms also affect the logic of the production of content on the platform." An overseas influencer marketing service provider told Ebang Dynamics that on TikTok, people may prefer to shoot some fresh and strange videos, but on Reels, everyone will share some of their own willingness to be seen by others, even exquisite posing. On TikTok, the interaction between strangers is more casual, unlike Reels.
In addition, in terms of the current advertising content, TikTok is dominated by new and exotic ideas, while content targeted at female users on Instagram has a higher number of plays.
"These small differences will affect the subsequent development of the two sides, and will also affect the brand's attitude towards the platform." The above-mentioned marketing service providers pointed out that at present, most cross-border e-commerce sellers have not regarded Reels as an important channel for content marketing.
Research by influencer marketing agency Markerly shows that brands such as the NBA posted the same short video content on TikTok and Reels received 63,000 likes on TikTok and 425,000 likes on Reels. This partly shows that Reels seems to be more suitable for brand promotion than TikTok, a mecca of celebrities and pop culture.
"Reels has the potential to become one of the new traffic channels for cross-border e-commerce in the future, depending on the number of users of Reels." Some advertising service providers said bluntly, "But from this stage, Reels is difficult to solve the problem of cross-border e-commerce traffic hunger." ”
03. The traffic in emerging markets is more dispersed, how to divide the advertising budget?
Facebook's huge traffic has supported half of the growth of cross-border e-commerce sellers, especially independent sellers, in the past few years.
Taking SHEIN as an example, SimilarWeb data shows that in 2021, Facebook will account for more than 60% of its social channel traffic.
Of Facebook's approximately 2.912 billion global monthly active users, North America accounts for 262 million, Europe 427 million, Asia Pacific 1.278 billion and other regions for 945 million. This means that cross-border e-commerce sellers are inseparable from Facebook's traffic nourishment in major regional markets around the world.
There is no doubt that the North American market is the core position of cross-border e-commerce. As the head e-commerce platform expands its business in Southeast Asia, India, the Middle East, Latin America and other emerging regions, cross-border e-commerce sellers have also ushered in the opportunity to invest in the "future incremental market".
However, unlike the North American market, emerging markets have not yet decided to be the absolute social media hegemon, and for cross-border e-commerce sellers, they are also facing the problem of traffic dispersion.
For example, in Southeast Asia, social apps that compete with Facebook and Instagram for user time include Line from South Korea, Twitter from the United States, TikTok, Wechat, BIGO LIVE from China, and Zalo from Southeast Asia. Among them, TikTok and Twitter are Meta's biggest competitors. According to App Annie's State of Mobility 2022 report, in Southeast Asia, TikTok's users spent an average of 16.4 hours per month in 2021, close to Facebook's 18.2 hours and much higher than Instagram's 9.9 hours.
In the Middle East and North Africa, Meta's competitors include the short video app TikTok, the graphic social media Twitter, the instant-to-burn social media SnapChat, the video media Youtube, the voice social media Yala, the messaging app Viber, and the video/live streaming app BIGO LIVE.
In other parts of Africa, social media apps that compete with Facebook, Instagram, and WhatsApp are not only Twitter, YouTube, LinkedIn, and Reddit, which are also from the United States, but also TikTok and Likee from China.
Consumers in Latin America are notoriously heavy users of social networks — 87.1 percent of internet users in the region use social networks at least once a month in 2020 (topping the global list), but in recent years, the first-mover Meta has also been eroded by emerging short-form video apps in the region. ByteDance's TikTok and Kuaishou's Kwai are both making rapid strides in Latin America.
"For customers who advertise in Southeast Asia, we recommend that they put a part of their marketing budget on TikTok. If you want to enter the Japanese market, Twitter is an indispensable delivery channel. In the Middle East market, SnapChat's influence is also very large, and SnapChat is a good marketing channel for some businesses with younger target user groups. An advertising service provider told Ebang Dynamics that when cross-border merchants place social media advertisements in different regional markets, they should combine the characteristics of different products and phased delivery goals to choose appropriate social media.
"In addition, in some markets where the marketing efficiency of celebrities is relatively high, YouTube is also a good choice." The service provider added.