What the death of social media means for retail
The Future. The pandemic was the best thing that happened to digital advertising and its most popular platforms, with retailers suddenly reliant on e-commerce rather than tried-and-true brick-and-mortar stores. But now, with social media collapsing, a tech winter setting in, and digital advertising going downhill fast, retailers may have to figure out how to move forward without them in the post-pandemic world.
What goes up…
The pandemic sent social media and digital advertising into a golden age almost overnight — and that golden age has ended nearly as quickly.
- When the lockdown forced all advertising and business online, customer acquisition costs (CACs) multiplied to ten times what they were in 2019. The competition was so fierce that many brands operated at a loss for the sake of long-term profitability.
- Then came Apple’s iOS 14.5 update that allowed users to opt out of ad tracking — and most did. Advertisers were hit hard: Meta warned investors that it expected to lose $10B in 2022 from the move.
- Fast forward to 2023, and social media’s dying, thanks to its potential for surveillance, radicalization issues, and damaging effects on our mental health. Bans and massive layoffs are ongoing, and engagement on major social media platforms like Meta and Instagram continues to fall.
Both in-store and online, retailers are increasingly using loyalty programs to compensate for losing ad tracking and cookies. Consider “zero party data” initiatives, in which customers voluntarily give their data to a retailer with the express intention that the company uses that data for the benefit of both parties.
More broadly, the decline of social media poses an opportunity for retailers to return to good old physical stores. Online advertising has always struggled with customer retention — even more than with acquisition — and both of these metrics have far higher success rates in physical retail outlets. Managing a brick-and-mortar store takes more work and is less scalable than e-commerce, but the latter is dying. Might as well get back out there.