😲How the 'Buy Button' 🛒hooks you
The best monetization models don't treat advertising as an afterthought, but as an integral part of delivering unique value to users.
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Today’s edition is a 6 minute read. It also features 3 polls, please participate in them to share your insights.
In 2014, the trend of ‘Buy Buttons’ 🛒in social media feed started. You could be looking at the cutest cat photo back then, and then be slammed with big ass advertisement to buy the winter shoes you don’t need.
It reminded me of the times when you’re driving on the highway and you see a big billboard on the road. Sometimes those billboards were really out of context (‘Your next Mauritius holiday awaits you’), but some of them said ‘McDonald’s 200m ahead’ - questionable which one’s really mean good for you.
In 2014, Twitter started the trend of buy buttons while browsing.
This means that while you were browsing through Twitter, your real estate could be hit with an advertisement from a merchant selling inventory and if you like it, you can just hit the buy button and move directly to the merchant website and end the hunger of your impulsive purchase. But do humans really work like this?
We explore the most successful and unsuccessful attempts at embedding advertising within existing big tech giants of social media. And we also explore why some of them worked and why others didn’t. If you’re planning to embed ads into your platform or monetize your real estate, today’s issue will be helpful for you.
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The two big failures of ‘Buy Buttons’ that taught us about human behavior
We’re going back in history here. But it is important to understand why somethings didn’t work out, and how they have led to more successful ways of doing ads today. History is a great teacher.
Twitter first launched ‘Buy Button’ in 2014 and after year of complex integrations related to payments, inventory showcase and more, it did a big open launch to expand ‘Buy Buttons’ to big commerce. Many merchants could reach out to Twitter audiences via their ecommerce platform provider integrations such as Shopify, WooCommerce and more.
When Jack Dorsey was asked how Buy Buttons were doing, he answered:
On the commerce side it is still super early for this product but a lot of our focus has been around making tweets more relevant and delivering more relevant tweets faster to people and as we do that everything within the action, within the tweet action benefits, including something like commerce
Early 2017, Twitter ended up shutting down the product. Neither the users of Twitter nor the advertisers were gaining a lot of benefit from it.
Infact in 2014, another big tech also launched ‘Buy Button’. It was Facebook. However, it was different from Twitter’s. Facebook allowed users to complete purchase within Facebook without ever leaving the ecosystem. Users could also allow Facebook to save their payment info so the next time they shop, Facebook remembered how they like to pay.
While Facebook cut down two important friction points for users (payment info, not having to leave Facebook) to shop, this feature also didn’t work for Facebook.
Even though both Twitter and Facebook had all the data about users browsing behaviors and what content users like, both these tech giants ended up misunderstanding the fact that users don’t come to facebook and twitter to shop. Even if they did change their mind later and want to shop, they would not impulsively buy it from a random sponsored ad that pops up.
But most importantly, the problem with these product initiatives is that they ‘look and sound like an advertisement’, and that takes away the genuineness from browsing experience. Back in 2014, when users were browsing through family updates, cute pet photos and what not, they would want to click ‘buy’ impulsively on a solar powered light advertisement with a buy button.
Humans don’t work like that.
How Instagram figured out the secret ingredient to making ads work
Instagram took a different approach. It did not ask businesses “hey, come and push ads to our users", but rather it asked brands to become content creators as well alongside all other users and promote posts/reels from their existing content on their business Instagram account.
This made sure that for a user browsing Instagram, when an advertisement pops up, it just looks human, it feels local. If you liked the “content” of the advertisement, you could go to homepage of the business and see what else they have to offer, or just otherwise continue to scroll to the next content.
Often when ad advertisement pops up in user’s scroll, it doesn’t even look like a promotion. Only if you liked something in that reel/post you could tap on it to see if you can buy it. On tapping, the option to explore and buy comes up. (Source of image below: Instagram). The advertisement is not trying to be an ad here, it is trying to be content to which humans can relate.
And if you liked something, you could roll up the whole inventory within Instagram and even pay with Meta Pay natively.
The Instagram approach of being content-led ensures that brands don’t look like ‘click hungry’ baits, but rather human. Brands have now been trying to get better at content, so that their ads work and not the other way around.
Instagram really stuck to what users expected from Instagram :
DAMN.GOOD.CONTENT.‼️‼️‼️
Infact, there is data to back up the more human relationships of users to brands on Instagram:
90% of Instagram users follow at least one business account, indicating high engagement with brands on the platform.
Instagram has 58% more engagement per follower than Facebook.
Instagram Reels get 22% more interaction than standard video posts on the platform.
98% of fashion brands use Instagram for marketing, showcasing its dominance in the fashion/lifestyle space.
How Pinterest became successful at commerce by pushing social proof
Pinterest users often visit the platform with a shopping mindset, actively seeking inspiration and ideas for products.
According to statistics, 90% of Pinterest users admit to being in a shopping mindset while using the platform, making them more receptive to Buyable Pins.
Pinterest's visual format and the ability to re-pin (similar to retweet / sharing feature on other platforms) products facilitates impulse purchases and viral sharing.
When users see others pinning and purchasing certain products, it creates a sense of social proof and validation, increasing the perceived desirability of those items.
Pinterest's algorithm serves users personalized content based on their interests and past behavior, creating a highly curated and tailored shopping experience. This personalization can increase the perceived relevance and appeal of buyable pins.
Pinterest really stuck to what users wanted from Pinterest:
DAMN.GOOD.SOCIALPROOF.‼️‼️‼️
Nearly half of all online shoppers in the United States have made a purchase directly influenced by Pinterest recommendations, and 83% of pins are re-pins, amplifying the potential for product discovery and virality. (Source of stats below)
85% of weekly Pinterest users have made a purchase based on brand pins.
97% of the top searches on Pinterest are unbranded, indicating a high potential for product discovery.
Pinterest saw a 50% year-over-year increase in buyable items saved to user boards.
Retailers who uploaded catalogs and tagged products on Pinterest experienced a 30% increase in attributed checkouts.
To make your ads work, you have to understand human psychology of online shopping
The human psychology behind the desire to shop online and get hooked on the "buy button" involves several key elements. In essence, the psychology of the online shopping experience is central to creating successful monetizable ads strategy for your product.
Convenience and Instant Gratification
Online shopping offers immense convenience - the ability to browse and purchase items from anywhere, anytime, without the hassle of physically going to stores. This taps into our innate desire for instant gratification and impulsive decision-making. The ease of clicking the "buy" button triggers dopamine releases in the brain associated with pleasure and reward.
Illusion of Scarcity and Urgency
E-commerce sites often create a sense of scarcity (e.g. "Only 2 left in stock!") and urgency (e.g. countdown timers, limited-time offers) to compel shoppers to make quick purchase decisions. This psychological tactic, known as scarcity bias, makes us perceive items as more valuable and desirable when their availability is limited.
Social Proof and FOMO
Online reviews, recommendations based on others' purchases, and social sharing features leverage the principles of social proof and fear of missing out (FOMO).Seeing others buy and enjoy products creates an urge in consumers to follow suit and avoid feeling left out.
Retail Therapy and Emotional Shopping
For some, online shopping provides an emotional release or "retail therapy" to cope with feelings like boredom, stress, or sadness. The act of browsing and buying temporarily boosts mood through the anticipation of receiving new items.
Personalization and Targeted Marketing
By analyzing user data, e-commerce sites can personalize product recommendations and marketing to match individual interests and past behaviors. This personalized experience creates a sense of exclusivity that drives continued engagement and purchases.
⭕Takeaway 1: Your monetization strategy (through allowing advertisements on your platform) should not be different from your product strategy that made you successful at first place
If you have a successful product that relies on a central product strategy theme (such as Instagram focuses on allowing users to digest or create great content and keep them hooked), then your monetization strategy by allowing advertisements on your platform should also be inline.
Take for example Google Search. When I search good ramen places near me, it pushes me some sponsored advertisements about ordering ready to make ramen, but I don’t particularly feel bad about Google slapping these options to me, because this is what I expect.
I expect from Google that it throws me pages of results and I will browse for a few minutes to find the meaningful one. As long as the advertisement at top is relevant to what I searched, I don’t mind.
The problem would be that if I am on Google to search, but Google throws me a 5 second video that I have to watch before I see search results, I would just run away. Because I don’t expect a video.
Google does what its users want from Google.
GOOD.SEARCH.RESULTS!!!!
⭕Takeaway 2: Product Thinking > Short-term ad revenue dollars
Successful monetization strategies go beyond just maximizing revenue dollars. They prioritize creating unique user experiences where advertising feels like an integrated part of the product, not a distraction.
The key is to think in terms of metrics like user retention, engagement, and satisfaction - not just short-term revenue gains. Intrusive or irrelevant ads may boost income temporarily but ultimately alienate users and harm the product's core value proposition.
Instagram understands this well.
Its advertising seamlessly blends into users' feeds, maintaining an immersive browsing experience. The ads don't disrupt the core use case of discovering and engaging with visual content from friends, influencers, and brands you care about.
Similarly, good mobile games monetize through in-app purchases that enhance gameplay experiences rather than bombarding users with interruptive video ads every few minutes.
The best monetization models don't treat advertising as an afterthought, but as an integral part of delivering unique value to users.
By aligning monetization with your product's core strengths and user needs, you can boost revenue while fostering long-term engagement and loyalty
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