April 7, 2021

S1E6 - Social Commerce with David Shaw

By Shane Madden and Whit Harwood

Join us for a TPT Digital podcast on how brands can use augmented reality (AR) to reach their customers in innovative ways. We're joined by David Shaw, International Product Lead at Snap, to discuss how Snapchat has built a platform that allows companies to connect with audiences around the world, driving brand engagement with every AR experience.

Show Transcript

Shane Madden: Hey guys, I'm Shane

Whit Harwood: And I'm Whit

Shane Madden: Today we're joined by David Shaw, head of international product marketing at Snapchat to discuss social commerce on how Snapchat is giving brands, the tools to digitize. We've got a lot of really, really interesting data points to get into today. So Whit let's jump right in.

Whit Harwood: Yeah, let's do it.

Shane Madden: Where are you calling in from?

David Shaw: Well, first of all, thanks for having me. Shane, It's been a while. I'm calling in from London, so I'm enjoying lockdown life here, hopefully coming out of it quite soon.

Shane Madden: Good deal. So for our listeners, I've known David for about 30 years, we were in elementary school together and then joined forces again and in university we studied in a business school in Devon. So, really appreciate you joining us today. And the theme of today's session or segments is social commerce, I'm super excited. I know Whit is as well. We feel like you're the right guy to get on the podcast, given your role as head of international product marketing for Snapchat. So just for our listeners, let's start at the top. Do you mind kind of giving us a couple of sentences or bullet points on what exactly Snapchat is?

David Shaw: Yeah, of course. So I'm hopeful that all of your listeners are familiar with Snapchat, and our active users of the platform, but for those who are not, we are fundamentally a camera company is what we will call ourselves. So we're an app that opens up to the camera that facilitates quick and easy communication between best friends. A fantastic way to express yourself through the camera that we open up to. Like I said, communicate with your best friends and experience the world's for a social map as well that we've built into the application, have access to some of the best content around and that we provide in partnership with the likes of, Bleacher Report, ESPN, The Economists, and more recently, we've launched a new platform called Spotlight, which is a vertical video feed of some of the best content from around the world. And we've actually introduced a creator phone for that as well, where we're giving away a million dollars a day to creators that are at building content on that platform and driving really fun engagement for our community.

Shane Madden: Got it. Great explanation. So, the basic premise of our podcast Off-the-Clock is, Whit and I decided to get on the mic together, given what was going with COVID in terms of the accelerants, the changing business environment, what was happening in the marketplace? Today's topic and theme is definitely one of those driving factors, which is social commerce and on how channels like yours of mediums, like yours are now playing a major role in retail. So, with that in mind, I guess how would you differentiate your platform from some of the other big social networks?

David Shaw: Yeah, so like I mentioned earlier, we definitely view ourselves very differently. We don't really set ourselves out as a social network. And I think that decision with that in mind was made back in 2018, we had a complete redesign of the app, and the idea was to separate social from media. So essentially having that comrade in the middle as a buffer between social, which is how you communicate with your friends and then media, and which is the media that you consume on Snap. And unlike I mentioned as well, we've really made sure to partner with some of the biggest and best news providers in the world. And we set really strict editorial guidelines with them to ensure that the content that is coming into the platform is safe and fit for purpose.

So, we feel like we're really differentiated with that in mind from a lot of the other platforms that are out there. And I think that, the real key to that, that I keep talking about is the camera. And we've really doubled down on augmented reality and AR kind of year on year on really building like an ecosystem of applications around the camera. So leaning in on the camera as a kind of a gateway and entry point into and discovery of the world around you, I'm really driving utility out of that discovery as well. And that's where there are some of the social commerce elements come into it. Right, being able to retail experiences through the camera, being able to try on clothing, being able to discover new products, that's where we see a massive opportunity. And that's where we've started to see some real success, particularly over the past year.

Whit Harwood: Dave, I love that metaphor of kind of the three-part function of the app, where you have, the media and consumption on one side, you have interaction on the other side, and then you kind of have the blending of the two right in between. Do you see user groups segmented across the three different parts of the app? And, I would have to imagine that you have some people that are specifically there for the social functions and disappearing message to other users, then you have some people who are there using it as another way to interact with ESPN and Bleacher Reports of the world. How do you think about users in each different phase of the app and then, what does that segmentation mean for how you're ultimately monetizing users?

David Shaw: Yeah, it's a really good question. You know, in the past, it very much would have been those three distinct areas as mentioned, we've introduced the map and Spotlight, which has really changed things up. And we see to your point, very differing, user behaviors per part of the app. So we do have people that are coming in using the map every day. We do have people that are communicating more through messaging. There is calmer users, we've got people within discover, and just to put it into perspective, we've got over 200 million users that are engaging with AR on snap every single day, we've got over 250 million users that are using our social map, the snap map every single month. And it's just like, numbers are crazy.

Even with Spotlight, just coming out, we announced in January that we've had over a hundred million monthly active users on spotlight. So, to your points, there are distinct use cases that exist on Snap. So, we do have users that are coming in, like myself that are using all the five distinct ad platforms almost, but we do also have those users that are engaging more in the camera than in other parts. And that's, I think therein lies the opportunity. And because to your point, there is blended functions that exist throughout and they're really centered around discoverability. So, within the map, it's discovering the world around you. Unlike the social experiences that can come from that, even within communication, we've been within the chat function, excuse me, we've introduced things like minis, which are mini-applications that sit within the chat function. So, I can buy tickets for the cinema, with my friends and I can discover new experiences there. It goes without saying, and the camera, the ability to discover that new utility, new products, et cetera, directly through the camera, and then the same within discovery, discovering that new content within spotlights. So I think that discoverability bleeds throughout, right.

But we're seeing a lot of user growth throughout the different parts and the goal is to develop those. So the product philosophy internally is, product platform business. And that's really what we want to kind of build out over time is developing those distinct features within snap, from products to platforms, into businesses, to enable, our users to get value from them, but also to enable our partners in the monetization size side to have new advertising experiences and reach new customers through those.

Shane Madden: You touched on something there, which is pretty interesting. So I think your daily user number is 265 million. And I think, what is that up 20 plus percent year over year of which those users are actively engaged in your app, something like 30 times a day. So I also read a stat, which said that 90% of 13 to 24 year old’s in the U.S are on Snapchat. Would you, as an international product markets here define your platform as niche or mainstream?

David Shaw: Yeah, it's a really good question. And I think in the past, it definitely would have been seen as quite niche because the use cases were niche, right? It was instant ephemeral messaging, and that's what a lot of people may came to the platform for at the beginning. And I think over time in the product decisions that have been made, separating social from media, the early decision to partner with those large broadcasting partners that have really brought it more mainstream, on the consumption side. And I think particularly like going back to the camera, every single person now has, probably one of the most powerful computers that's ever existed in their pockets. And the camera is now the gateway into that computer. So the camera is almost like the new cursor. So our parents' generation, maybe not our parents' generation, but even our generation, we went to Google and the cursor was our home screen. The new home screen is the camera.

And I think that's enabled snap to become more mainstream. I move away from that niche because, the camera, like I said, is that entry point into this new way of discovering the world around you. So I think with that in mind becoming much more mainstream, I'm moving away from those niche use cases into, a much more mainstream product. And you'll also see that through our user base, in the past, it would have been perceived that Snap was very much focused on 13 to 17 as the core audience. It's probably more the inverse of that now, like 18 plus represents the majority of our audience and in a lot of markets. And that's because users that have been on the platform early from when they were 13to 15, et cetera, they've stayed on the platform. So, the users are aging up. And we're also onboarding net new customers and particularly in international markets that are actually aging up. So to give you an example in a market like Norway, we have the inverse in a lot of other countries where the majority of our audience is actually 28 plus. And so, it's really interesting to see how our product is used in different markets with that in mind.

Whit Harwood: That's such a good point because I was just going to ask you about that too. When I worked at NBC News, one of the things that people in the news side always talked about was you kind of went through the life cycle of being a news viewer. You started watching the Today Show at some point in your thirties, once you had kids and you started watching nightly news at some point in your forties, because you wanted to be informed and then you become older and you sit down and watch Rachel Maddow every night on MSNBC, that function on the cable side essentially went away within the last five years, right? People who are our age, collectively, the three of us are not graduating into that standard function as we're kind of maturing in our media lifecycle. It's fascinating to hear you talk about that on the Snap side, because Snap is becoming that platform with a bunch of different layers and functions to it.

And another question I was going to ask you, which you kind of just touch on is how do you measure adding on different components, like different key tent poles of the app, it sounds like that's what spotlight is going to be. These obviously have huge potential to be able to have users transact within the app for third party businesses. How do you think about though adding on new key parts of the business to an app when you're still growing the primary area, which is kind of the camera and getting people to come to the app every day?

David Shaw: Yeah, it's a really good question. And I think quickly to touch on what you were talking about the life cycle within TV and on people, moving from one show to the next and one, maybe cable news provider or whatever else to the next. We've actually seen that a lot of the larger cable networks are leveraging Snap to access those users at an early age and to start to bring them over. So just to give an example in the UK, Sky News are creating new shorter broadcast programs to target a younger audience, to hook them and bring them over at an earlier age, the same with channel four and the same with ITV, because that cord coding is becoming more and more prevalent. So they want to get access to them in a different way. So that's just to touch on that, which I think is an interesting tidbit, but on your point about how do we continue to evolve the product? A lot of it comes down to the team we've hired, we've hired a really strong, design and product and engineering team. And I suppose the vision, pardon me, that our founder and CEO, Evan Spiegel has, and Bobby Murphy, our co-founder that are still very much present day to day. And their vision is to, is really focused around experiences that will come from the camera. And making social experiences more meaningful and snap being the vehicle for that. So like everything that we're bringing in is in some way related, it's in some way as well, kind of enhancing, how we as kind of our users at different generation are experiencing the world around them.

So that's where I was talking about the snap map. It is that social map. And if you look at like spring break, for example, if you go to Twitter, you type in spring break, snap map all you'll see is like everyone's Bitmoji on snap map and in Florida or Miami. And you know, when you go through the map and you click it on the stories, you'll see that like kind of unfolding in front of them. So that all comes through the camera, the content that's created through that, that drives the engagement. So there's kind of a flywheel that exists there. And then we're really focused on, you know, continuing to build those engaging experiences, to build like innovative technology that will sit around us that closer blends that your digital life and real life where they are at the heart.

Shane Madden: So this is the meat of why I was so excited to get you on the pod day with so you've got an enormous base. There's two arms of this, one is the democratization of experiences through the likes of VAR. And then secondly, is the tools to help businesses digitize. Right. So in reading some of your stats, I think it was 900 plus million in ad driven revenue for Snapchat, I think it was 2020, but these two arms. With these two arms you're now launching into an e-commerce retail play, you obviously just acquired Fit Analytics, I think a Berlin based company. So can you give our listeners some context as to firstly why you made that acquisition, what the angle is, and then most importantly, what it means for brands that want to try and monetize your platform for the purposes of their business?

David Shaw: Yeah, I think that's a really exciting acquisition for us. And if you look back at all of the acquisitions that we've made from Bitmoji through to Zenly from a map standpoint, they've all been really additive to our overall service and really feel that way for Fit Analytics. And it's going to be much of the same, you know, enabling those to continue to build out a really strong e-commerce proposition. And I'm really excited to see how that works out. And, but in terms of social commerce in general and on social commerce on snap, it all goes back to, it's a four-year journey that we've been on because at this time, well entering this time four years ago, we really started to scale out our SL surf business. So software that enables advertisers and agencies of all shapes and sizes to get access to our kind of unique advertising proposition, our unique audience and advertise at scale, from the very early stages, we were very much focused on performance with that in mind.

So, and I think that speaks more today than it ever has because every marketer now is a performance marketer. I don't think there's any more talk of brand versus performance marketing and a daughter at, towards the bottom line. Like a daughter has spent in advertising is as important to the CMO as it is to the CFO because every single dollar that's spent in advertising needs to flow towards the bottom line. So I think that's like a really fundamental thing and where we've succeeded is the products that we've built have always been focused in on that. So whether it's the ad units that were vertical video signed on, and we were the first to do this, whether it was introducing things like dynamic product ads, which we did over the last couple of years, enabling advertisers to reach high intent users at close to the moment of purchase and entering in that moment. And I think this year in particular, it's the introduction of augmented reality into all of this, which has really seen us step out ahead.

And it's just these new innovative solutions that we're bringing, particularly during the global pandemic, when you can't go to a store and try on a pair of shoes, being able to open up your camera and try them on and actually purchase them through the camera. And if we think of somewhere like Sephora and someone going in in the past and trying on a mascara or a lipstick, maybe that's not going to be possible in the future, but they can try that on with the camera and maybe make that purchase through the camera as well. So that's where we're really excited, where we're going to continue to double down as a business and hopefully the most important thing. And I go back to my point back to the CMO and the CFO, making sure that every dollar that comes into our platform is having some impact on the bottom line for the businesses that we're working with. And that's been a real focus from when I joined snap over four years ago. And I think that's going to really continue as a focus across the business as we continue to move forward.

Shane Madden: Thanks for the heads up. So you mentioned this before David in advance of today's pod, you had brought up another couple of examples where I think this is a very relevant, particularly in those industries where brick and mortar was obviously prominent. In-person, being the main point of customer interaction. Are there any more examples of where your democratization of experiences are really coming through, automotive or, was there any other examples you care to share with the listeners?

David Shaw: Yeah, for sure. It’s important to say I don't think that physical retail experiences are going away. And I I don't think that brick and mortar retail is going away. I love going in and doing a bit of shopping. And I think everyone is looking forward to getting back to that. But I think what AR offers is just new ways to gain those experiences. To your point, Shane, we've had some really great partnerships over the last number of years with some massive brands and that we've really closely partnered with to bring maybe non-traditional items into the camera. So I think a great example of that is with BMW, they were launching their two series car a couple of years ago, and we actually built that car in AR, and enabled people to put it into their driveway, to see what it would look like.

And we've partnered with a huge amount of different auto brands over the last couple of years to continue to do that. Even seeing what the different colors would look like on the car, different wheels, different interiors, I think has been pretty cool. I'm really excited to continue with that. And another really interesting one that we did was with Lego. What they wanted to do during ad week, I think it was last year or the year before in London, they actually rented out a physical retail space that was empty. And when you enter the store, you were able to unlock an experience through Snapchats that actually created a store in augmented reality, that was a Lego store, and you could click on items and purchase them then and there within the store.

So it was just really interesting to see how different brands are embracing augmented reality, how different brands are also just embracing change on they're trying to innovate. They're trying to stay ahead. And I think that's what the best marketers will continue to do. And that's how the best marketers will continue to stay ahead and will continue to succeed is through that innovation, it's embracing change, and it's being dynamic to what's happening in the world around them. We've seen that again, going back to the past year, we've seen that time and time again, the best brands and the ones that are really thriving in this are those that are dynamic. Those that are embracing new technology on our driving for innovation.

Shane Madden: So, I'm going to ask a quick question and Whit feel free to jump in. So, David, I got the impression if we look at the marketplace that you guys operate in, Snap just feels and seems to me as if it's the shining light on the hill as compared to some of the other platforms. And what I mean by that specifically is, not as many bad actors, better behavior, just a cleaner app. Why do you think that is?

David Shaw: Yeah, I think, first of all thanks for saying that because it's a great job the team is doing in building a technology and also putting in policies in place to create that environment. And it's happened over a long period of time. So it's not an overnight thing. We've taken a huge amount of feedback on board and that's, I think one of the things that we're all at the proudest about is, we really listened to the market. We listened to our customers and we tried to build solutions and environments for them to use our platform in a safe way. And it goes back to the very beginning of like, when the platform started, there was policies that were put in place to try to prevent bad actors coming onto the platform. When we started with the content business, we put strict editorial guidelines in place that would prevent things like, misinformation spreading before misinformation on quote on quote fake news became a thing. You know, we had editorial policies in place to prevent that, and we've continued to do that through, right. So whether it’s drives to encourage mental health on the platform, to try to prevent the bullying on the platform, we've made a huge amount of efforts and, partnered with many different organizations to do this.

Shane Madden: Yes, it feels like a kinder, softer place. And it's super important given your especially in the U.S your user base is, they're teens right up until early twenties. So, yeah.

David Shaw: Yeah. And it's one of our core principles is like our three core principles are being kind smart and creative. And we lean in heavily on that kind of piece. And I think that's reflective in how we're looking to build out the business and it goes back to what we were talking about earlier. How do we stay ahead? We continue to innovate. We bring on some really smart product leaders. And we have a leader in place as well. That wants to ensure that as we continue to build out our platform, we don't stray from our core principles. And I think that's a really important point.

Whit Harwood: Yeah. So, Dave, I want to kind of put your feet to the fire for a second. We've talked about a lot of different principles of Snap and a lot of different core functions of the app and ways that it's been so successful. If over the course of the next 12 to 24 months, you had to pick one area where you would say that you want to see Snap be most successful. Would it be e-commerce and transactions, core user growth, and kind of increasing the addressable market around the core functionality of the app and the camera, or would you want users to go more deeper into the consumption and the media side of the platform?

David Shaw: That's a really good question. And the ideal scenario is you succeed, you succeed in one of those, and that has a flywheel effect across the others. Right? So the ideal scenario is, we grow our user base because we've got something there that is going to drive an odd utility for them. And then when they get in and as they become, as they chat with their friends, as they consume content or whatever else, they then find value in other parts of the application. And I think that like discoverability, but I mentioned is kind of that thing that connects all that together, right. Because if I'm in there and I'm discovering the new content and I'm chatting with my friends and I'm discovering through the commerce, et cetera, I think commerce is the by-product of that discoverability because as I'm discovering those new experiences and on those new things, and being able to have a seamless transaction from that discoverability is where we will hopefully drive success, obviously for our customers drive value for our users. And then we succeed ourselves in the long run. So I think like the discovery, I'd say that discoverability piece will be really key because discoverability will drive, great engagement for our users. And then we'll hopefully also drive great results from an e-commerce standpoint, which has a positive impact on our customers. And then also has a positive impact on us from a business standpoint.

Whit Harwood: Yeah. I think that makes a lot of sense top of funnel growth. Um, it seems like it's an area where we all could do better and, um, where we all think about, you know, how do we get everybody in the app and using different parts of the app. And I think that makes a lot of sense.

Shane Madden: So David we're probably coming up to time here, but really appreciate it. As you likely know, at this point, a lot of our users are retailers, FMCG, consumer products, agencies, digital folks, trying to learn about kind of what's going on, how they can maximize their position. So I'm going to ask you a question and would love your response, I would love you to be really specific. So if I'm a brand, how do I get the biggest bang for my buck on your platform by virtue of the value you bring, what are the specific things you would do if you were a brand to optimize it?

David Shaw: Yeah, like I think I keep going back to that four-year journey because I think it's really important to know how much progress we've made in four years. The answer I would've given you, would have been different because you would have had to get a credit line to advertise in the platform. You would have had to have specific assets ready-to-go vertical video assets, ready to go, and you may not have been able to judge the return on ad spend and effort that you've put into the platform today. We've built a lens web builder, which will enable advertisers’ agencies of all shapes and sizes to go in and build AR experiences from templates on Snap. We've got Snap publisher, which will enable advertisers to cost net new assets. If they don't have vertical assets for our platform, advertisers can come in and set up campaigns for as little as $5 per day.

They can pay towards the objectives that mean the most to them. So they can actually bid towards a lower phone election, like an app install, a purchase, and you know an install plus a purchase. So we have all of that. So if you're asking me the biggest bang for your book, it's having the right creative with the right targeting in place, bidding towards those objectives, that mean the most to you. And I'm really hopeful that that's not contrived those results because as you've mentioned, we're seeing really strong growth in our business. And I think that's the big driver in that alongside our brand businesses, our performance business, and advertisers and agencies, won't be coming back to our platform. They won't be increasing their investments unless they're seeing results in the backend, unless they're seeing a return on their efforts on return, on their ad spend.

They're not going to come back to this. And I think the fact that we're continuing to grow active advertisers on pure revenue is a direct result of the fact that we are driving results, bottom-line results for that CFO and that CFO who wants to see that dollar spend go towards the bottom line. And so, it's leveraging the tools that we've got in place, and we've also got teams ready to go to help you out. So if you are listening as an advertiser, as an agency, getting in touch with those, because we do have teams that are ready to go to help you out in many different ways.

Shane Madden: Yeah. Awesome. David, I think I read yesterday Snapchat's market cap was something like 75 billion. And so, you guys are obviously doing something, right. I just went and I was just so pumped to get you on and just give him what's going on with the social commerce aspect and where you're going with VR, et cetera. So, really appreciate your time. For any listeners that want to get in touch with you, if you have a Twitter handle or what's the best way to be in touch.

David Shaw: Yeah. My Twitter handle is @DaveShaw. So maybe that's the best way to get in touch for now. And then any other questions go through that, I'd be happy to put you in touch with the right people at Snap. And yeah, really excited to chat with you again, after all these years, Shane, come full circle, and Whit as well. Wish you all the best with your new endeavor on that. Thank you both so much.

Shane Madden: David, thanks so much for joining us today. Really appreciate it. For more information on how to optimize your global social channels, please get in touch with us on TPTdigital.com.