Introducing Future Commerce Salons. Dinner events are being planned for Seattle, Miami, New York, Chicago, and Los Angeles for Future Commerce subscribers. Space is extremely limited, please respond to this email if you are interested in attending. Our first event will be in two weeks in Seattle. We hope to see you there.
Google may not be in the billionaire space race, but that doesn’t mean they haven’t achieved escape velocity.
As we foretold in our annual Predictions Episode this year, Youtube is the entertainment leviathan to beat this year. Ad revenues from Youtube alone topped $8.6B for Q4, beating out Netflix at a comparable $7.7B; driving their 365-day total in 2021 to a cool $28.8B.
But it isn’t due to their outsized influence on commerce and purchasing. It’s due to the growth of ad revenue.
When speaking about the future opportunities for the platform, Alphabet CEO Sundar Pichai made a verbal list of growth areas: “Podcasts, gaming, learning, sports, across all of these areas we will take a vertical specific look and find out how we can support creators better.”
Noticeably absent: mention of contextual livestream shopping and commerce, a tactic we’re less-than-bullish on.
A lion’s share of the Youtube business model is ad-centric. If you’re as addicted to Five Minute Crafts as my children are, you’re all-too-familiar with Youtube’s pre-roll ads and interstitial programmatic ad insertion. There are ad units below the video content as well — called the Merch Shelf — where Creators can associate a print-on-demand service or Google Shopping ads on their channel, or even their video. While DTC brands test creator strategies, however, streamers are left to promote a product by promo code or URL. Or, as we put it:
If [contextual purchasing] was a significant source of future revenue growth we’d have A) seen it by now or B) seen breakout numbers from Meta (Instagram’s parent company) on their many tests and recent Shopify integration support. But we haven’t.
Recent growth of Youtube can be attributed to the attrition and migration of other audiences to the platform. Youtube as a whole is more generous than the rest, sharing up to 55% of revenue with their creators. While Instagram and TikTok subsidize live streams with flat dollar amounts for their creators to consistently host livestreams, Youtube has taken the Twitch-style approach for streamers. Streamers are encouraged to use features like Super Chat and Super Stickers, a model more akin to patronage than commerce influence.
Recently, the SVP of Commerce at Buzzfeed, and frequent Future Commerce contributor, Nilla Ali, sat with Digiday for an interview discussing their own path with livestream. “I think you have to take another step back and think about what the psychological reason is for someone,” Ali said. “We’re still understanding that behavior, and that behavior is going to vary, depending on platform, price-point, talent.”
While publishers and platforms try to understand a user behavior for stream-shopping entertainment, QVC’s core business is shrinking amid post-pandemic reopenings, down between 6.5-9% across business units. So, while livestream shopping might be growing in Asia, even the incumbents are losing ground here in the West.
So in 2022, Youtube isn’t going to need to compete with QVC, or teach their audience a new buying modality. Instead, they’ll compete for eyeballs and earholes, setting their sites on growing greater share of attention with the likes of Twitch (Amazon), with Spotify, and fandom like The Athletic (a New York Times company).
A16Z Goes Bananas. Billionaire VC Marc Andreesen took a short break from Twitter sh*tposing this week. Venture firm Andreesen Horowitz is reportedly in talks to invest in Yuga Labs, the creators of Bored Ape Yacht Club. A fitting match, as A16Z are deep in on crypto and the metaverse already. This investment would be (if it happens) on the heels of a16z’s investment in Launch House, the multi-dimensional creator community. Between BAYC, Andreesen’s Twitter, and Launch House, A16Z seems to be a Katamari Damacy of toxic internet friends.
More trouble in NFT paradise. Nike is suing StockX for selling unauthorized NFTs using their trademarks “at heavily inflated prices to unsuspecting consumers.” Last we checked, heavily inflated prices were the entire point of the sneaker industry?
More Sights and Sounds. Jeff Bezos needs Rotterdam to dismantle its historical Koningshaven Bridge so he can float his $485 superyacht out to sea. Pinterest is going virtual with a new AR tool for home decor shoppers. Cash App lets you pay people using stocks. Walmart expands its relationship with Quest Diagnostics and adds healthcare lab testing to its offerings. And to celebrate bathrooms reopening in the San Fran transit, these guys used toilet paper for their ribbon cutting ceremony.
Bluelight Special on aisle skincare. TikTok star Addison Rae is under fire on the interwebs for her bogus face mist that protects skin from blue light and the draining and dehydrating effects of scrolling and swiping.
Reviews under review. Fashion Nova is going to have to pay a $4.2 million settlement after F.T.C. allegations that they were purposefully not making negative reviews public. Rather, the company was putting them through an “approval process” that higher rated reviews did not have to go through, leaving thousands of low-starred reviews unpublished.
Do Mexican Pizzas ever cross your mind? Dolly Parton is apparently a much bigger Taco Bell fan than most of us would have pegged her for. And she’s made it known that like many of us, she’d like them to bring the Mexican Pizza back to the menu. The stars really are just like us.
Malaysian Second Hand Market.Malaysia is establishing itself a source of high value, sought-after items in the global resale market. American donations shipped overseas and sellers can purchase clothing by the bale, then sort and resell top items. Malaysia’s close proximity to Japan means sellers can source god-tier gear, and their motivated middle-income population has sophisticated ecommerce experience. Pair that with access to advanced shipping logistics and global shipping lanes, and a rising Asian middle class? It creates the perfect crosswinds for good business.