One of the earliest recorded forms of commerce was cattle trade, around 10,000 B.C. Cattle had a fixed value and were exchanged for goods and services

Commerce is now a $26 trillion global market (e-commerce is about $10 trillion), mostly underpinned by cash, credit cards, debit cards, and, increasingly, digital payments.

There are two primary types of shopping: search-driven shopping and discovery-driven shopping. Today, Amazon dominates search-driven shopping: 74% of online shopping searches in the U.S. now originate on Amazon.com

Amazon’s dominance in search-driven shopping is a key reason it’s been able to build a formidable advertising business in a few short years.

Now Amazon is a top-5 global business by advertising revenues.

Looking at 2022 data vs. that ~2020 data, Amazon’s ad revenue is already up to $30B+. Amazon is a certified advertising behemoth.

Discovery-driven shopping is the mall. It’s wandering around, browsing, deciding what you might want to buy. Discovery-driven shopping is about serendipity.

In the U.S., social commerce hasn’t taken off to the same degree as in China; rather, commerce seems to be layered on top of existing social platforms (Instagram, Pinterest, Facebook Marketplace), rather than companies blending social + commerce from the get-go.

there are two types of advertising worth knowing: direct response advertising, which has the goal of making a transaction happen then and there, and brand advertising, which has the goal of building brand equity.

The classic example of brand advertising, meanwhile, is Coca-Cola. Coke doesn’t care that you buy that Coke right now, but rather that next time you’re thirsty at a movie theater, you reach for a Coke and not a Pepsi.

Most estimates have direct response comprising about 80% of all digital ad dollars spent online.

when CACs got too high, DTC brands opted to go the old-fashioned route: brick-and-mortar locations.

Brands like Warby Parker and Jessica Alba’s Honest Company now get 50% or more of their revenue from physical retail locations

Influencer marketing is one option, and the industry has swelled from $1.7 billion in 2016 to $16.4 billion in 2022 (a 46% CAGR). Influencer underpins discovery-driven commerce.

But influencer marketing is also broken. As I wrote in May’s Influencer Marketing 2.0, most influencer campaigns rely on hefty upfront lump-sum payments and use hacks like discount codes to track attribution. ROI is often poor, and measurement is even worse. The channel is difficult to scale efficiently.

Brands need new channels. One opportunity: creators.

Brands care about a few things: 1) They only want to pay when they’ve acquired a new customer and done so profitably; 2) They want to control who can sell / promote their brand and where; and 3) They want the ability to measure what’s working and know what’s worth doubling down on.