KUALA LUMPUR: Many businesses including micro, small and medium enterprises (MSMEs), in an effort to find more effective ways of promoting their products or services, choose social media as a key communication channel in the digital marketing landscape
They recruit the services of individuals termed as "social media influencers" - individuals with a significant following on social media - for marketing purposes.
These so-called "influencers" are involved in endorsing products or services for marketers through various social media channels, often in exchange for money or free or discounted products or services.
However, marketers and influencers should be aware of the legal issues involved in the practice of using social media for product or service endorsement.
An industry observer said also in this context is the government's latest announcement that obligates all social media and internet messaging services to apply for a Class Licence for Application Service Providers as part of the new regulatory framework.
The government's goal is to make the internet safer for children and families.
Although the regulation is expected to directly affect most social media providers, it remains unclear whether it will also affect e-commerce platforms linked to these providers, or whether they will be considered separate entities.
The observer said while the government had assured that the licensing requirements will only affect providers and not individual users, the potential impact of the new regulations on individual users who are also sellers on these platforms must also be taken into account.
Marketing on social media platforms
There are four social media platforms that are commonly used by local MSMEs namely TikTok Shop, Shopee, Facebook Marketplace and Carousell, the observer said.
TikTok Shop can be said to be on the lips of every seller in the country. The format is simple and the reach is wide.
Sellers promote products through Shoppertainment, combining content and commerce through live sessions, videos and shoppable ads with full autonomy over marketing, branding and pricing.
TikTok Shop has gathered more than one million sellers and 1.7 million affiliate creators, who earn most of their revenue by promoting products on the TikTok platform.
The best-selling categories on TikTok Shop are beauty, fashion and household products.
A total of 98 per cent of sellers are SMEs, with 60 per cent from major urban states and 40 per cent from non-major urban states.
It allows Malaysian shoppers to access over 600 local and international brands.
It is an initiative by TikTok Shop to improve the shopping experience of users and provide support for local SMEs on the e-commerce platform.
Shopee recorded over one million Malaysians registered to stream on Shopee live, with over 450,000 new local sellers, influencers and affiliates in its ecosystem nationwide.
In 2023, live stream orders through Shopee Live increased by 500 per cent compared to 2022. This shows that Shopee Live has become the main channel to discover local products.
In the same year, 80,000 sellers increased revenue by 25 per cent year over year while affiliate orders increased by 420 per cent and live stream orders increased by 500 per cent.
Malaysians engaged with local influencers 3.5 billion times on Shopee Live and recorded one million local streams since inception in 2019.
Until January 2024, 60,000 SMEs benefitted from the e-commerce platform's strategic collaboration with government ministries and agencies.
Impact on MSMEs
MSMEs make up a significant 78.4 percent of businesses in Malaysia, and many tend to use social media as a marketing tool.
The government's new rules, which target providers of social media and internet messaging services with at least eight million registered users, have raised questions about their reach and impact.
Among them are:
Ambiguity: There is uncertainty as to whether platforms linked to major social media services, such as TikTok Shop to TikTok, will also fall under the new rules.
This lack of clarity is critical for many stakeholders, especially those whose livelihoods depend on these platforms.
Impact on SMEs:
TikTok Shop, for example, has become an essential tool for over one million SMEs in Malaysia, offering them control over their marketing strategy. New rules can have an impact on this business significantly.
Positive Aspects:
On the one hand, licensing requirements may increase protection for independent sellers by creating a regulatory framework for the platforms they use. This can ensure a safer and fairer environment for business activities.
Potential Disadvantages:
On the other hand, these requirements may impose additional burdens on individual sellers.
Excessive government control over platforms may lead to sudden changes that affect sellers' operations and livelihoods, causing instability and uncertainty.
They may worry that strict government controls on platform providers could negatively impact their business without warning.
On the other hand, these licensing requirements may be an additional burden to individual sellers, which indirectly discourages interest in doing business.
The observer said the balance between regulatory protection and operational freedom is complex.
The implementation of these regulations needs to carefully address these concerns to support the digital economy without stifling it, he added.