Digital Marketing Redux   //   April 15, 2024

How YouTube Shopping is upping its social commerce competition with TikTok

YouTube announced a suite of updates to its Shopping features this month, signaling more flexibility for content creators to monetize their channels. But more broadly, it’s a sign that YouTube’s parent company Alphabet sees creators and their affiliates as a way to stay competitive in the social commerce ever-changing landscape.

Some of the updates focus on new ways to showcase products on a creator’s page and refresh old content with new shopping links. But a critical component for brands is the launch of an “Affiliate Hub” that gives creators access to more than 300 of YouTube’s partner brands like Target, Ulta and Adidas. The hub will have features like showing creators’ commission rates and enabling sample requests.

The latest updates include:

  • Shopping Collections, a feature that creators can put on their Store tab, product list and video description. Instead of individual product listings, they can group items together in a single category, like “Spring Nail Must Haves.”
  • Affiliate Hub, or a centralized location for creators to find brands to work with, commissions rates, promo codes and sample requests.
  • Tagging products across multiple videos, which will allow creators to monetize older content.
  • Integration with Fourthwall, a web platform for creators.

YouTube’s rollout of updates arrives as influencer agencies report mixed experiences with TikTok Shop, the newest and arguably flashiest entrance in the world of social commerce. After launching in September with a slow burn, TikTok is seeking to bring new creators to the platform while making a pitch to brands with improvements in its ad network. Still, in a short amount of time TikTok Shop aims to grow its business tenfold to $17.5 billion this year, according to Bloomberg.

But over at YouTube, the strategy appears to be focused on making it easier for creators to make shoppable content that, in turn, drives brand sales and platform ad revenue.

Michael Jaconi, founder of affiliate link company Button, said the new affiliate hub will become a way for brands to generate more ROI from the affiliate channel.

More broadly, Jaconi said the updates are a sign that YouTube’s parent company Google — which sold off its affiliate network in 2013 — once again sees it as a future revenue stream, Jaconi said.

“If the biggest ads company in the world, Google, is building more affiliate commerce enablement tools, I think they think it’s because the internet is heading in that way too,” he said.

Overall, the social commerce world is booming. While 2020 saw nearly $27 billion in sales from social commerce in the United States, that figure hit $67 billion last year and is expected to more than double to $144.5 billion in 2027, per eMarketer.

Much of this growing war between platforms comes down to attracting younger viewers — who are more likely to become shoppers. EMarketer found in January that 68% of Gen Zers are likely to make purchases directly on TikTok — the same portion who said they would shop on YouTube. But YouTube had a greater penetration among all U.S. adults — with 46% saying they were likely to make a purchase on TikTok versus 39% on YouTube.

Meanwhile, Meta properties continue their dominance in social commerce, with Instagram capturing 71% of likely Gen Z shoppers. For its part, Facebook leads the pack in raw numbers with an expected 64.6 million social commerce buyers the year.

Joseph Sottile, co-founder of the influencer agency Diffraction, said that the updates to YouTube Shopping are good news for creators who use multiple platforms. People who have had success on TikTok can use these new tools to bring their content to YouTube. Not only does help the creators reach a new audience and get more profit from their affiliate relationships, but it creates multiple touchpoints for fans across platforms.

“You can double dip easily,” he said. “I’m excited for people who’ve had success on TikTok Shop and other creators to reign our lessons over to YouTube.”

YouTube has developed shopping features since at least 2018 when creators got the ability to sell merch video videos. Then, it saw a major expansion in 2022 thanks to an integration with Shopify that let creators make their own stores and sell directly from their channels. There have also been numerous tweaks and updates since then — like an expansion of its affiliate program to creators who are in the YouTube Partner Program.

YouTube wouldn’t share Modern Retail how long it’s been working on these updates. But a spokesperson said via email that creator feedback was critical in putting together the new updates.

“A feature like Collections, for instance, has been highly requested, since many fans already often ask their favorite creators for their go-to products or most loved items,” a spokesperson said in an email. “We hope this makes it easier so people can shop their favorite products and increase earnings.”

This mirrors comments from Alphabet executives. Philipp Schindler, svp and chief business officer, said during the company’s fourth-quarter earnings call that “YouTube success starts with creator success.” YouTube’s ad revenue shot up 16% year-over-year to $9.2 billion.

“More creators mean more content, which leads to more viewers. And via ads and subscriptions, these viewers fund our creators and drive the eyeballs and engagement our advertisers want,” he said.