Instagram eyes-up lucrative influencer marketing industry

The real reason they’re focusing on influencer marketing & what they’ll (probably) do next.

Instagram’s unbelievable popularity was driven by its users’ love of the quick loading visual feed of content from people they love and admire. The app was perfectly staged to benefit from the combined forces of mobile proliferation, 4G roll-out, and consumer fatigue for advertising</jargon>.

The ads have crept back in, of course: highly expensive, abruptly tagged with ‘sponsored’, and always somehow looking distinctly like a 💩 in your feed.

My Children tell me that inventing banner ad is like inventing smallpox. J.McCambley (inventor of the banner ad)
Here’s what the first banner ad looked like (HotWired / AT&T)

🌈 Remember banner ads?🎉

Banner ads these days get click through of 0.05%, and with ad-blockers coming to mobile that number is only going one way. By comparison, good influencer-made content can regularly see 5–10% engagement (a like or a comment). So you can understand why brands hire influencers to help avoid putting a 💩 in your feed.

Like the time we spotted 6 dogs outside Desigual’s NFYW show, and improvised a photoshoot with artist cocodavez.

That said, brands enter muddy territory from a legal perspective if any paid promotion isn’t clearly labelled as so, so this highly engaging ad-free content is a mixed blessing. In France🇫🇷, you could actually end up in jail if you really rub up against their consumer protection laws. Seriously (email us and we’ll share snippets of the actual. written. law.).

Since there are no clear rules being set by advertising standards or consumer protection agencies across Europe, the influencer marketing industry has initiated self-policing through its own informal notations: #Advertisement or #Sponsored (in any language), most often contractually agreed by clients fearful of potential repercussions down the line.

So, yay, Instagram (Facebook) have now ‘cleaned up’ this mess with an in-built tag.

Yup, as if it wasn’t clear this was an #advert Marcus. Great co-creation Marcus. We really like you Marcus, but sorry… we digress.

Any advertiser can now request that their influencers simply tick a box to avoid the above risks. Instagrams (and FB posts) showing the snappily-named “Paid Partnership With” Tag, can now clearly state that:

  1. This post is an advert
  2. “Brand XYZ” is paying for it

This is pretty addy-looking, but as a Brucie bonus, in exchange the brands get access to client-side data on Post and Story performance directly via Facebook’s Ad Manager.

Now that IS handy

But hold on…

Question: What do Instagram (Facebook) get out of this?

Answer:💡 They’re getting a lot of data on who the influencers are, what brands are involved, and how influencer marketing posts perform and behave organically.

Wait… 🤔 … where will they go next with this? Oh Instagram owned by Facebook who long since switched off 99% of organic reach for large brand pages. I wonder indeed…

Real Answer: 💰 Since 80% of us follow a brand, chances are there’s one of the 000s of thousands of influencers in your feed too. Those influencers might be conservatively earning €1k-€5k for each sponsored post, usually posting several per month, so you can do the maths. Poor little Instagram sees €0 of this revenue, yet this is an industry worth an unfathomable sum. VC investment in the last 3 years totalled $1.45 Billion, and something tells us Instagram are trying to put that right.

But how will they do that Jemima? Well let me just …🔮 👀

Here are 4 predictions for what Instagram will do next:

  1. Of course, their opening gambit is on the surface just in the name of transparency, and for good reason — they too need to stay on the right side of the law as the platform provider. So, they’ll lobby the European Union for clearer laws around Influencer Marketing, using their own pioneering transparency as a knock against rival platforms, AND as a clever way to make it illegal to NOT use their lovely tag.
  2. They’ve already moved from a chronological to an algorithmic feed, and will further adjust this to create a dip in visibility for Influencer Posts unless the Brand pays to promote them. Hello new tag ‘Sponsored Paid Partnership with XYZ’.
  3. As they can now clean up their data around engagement (reducing the impact of engagement on paid partnership posts) ensuring their algorithmic newsfeed prioritises the *most interesting* content, they’ll now start showing you paid influencer posts related to brands they think you might like (irrespective of whether you follow that influencer).
  4. They’ll clamp down on those who manipulate Instagram with ‘follow- loops’ and other tactics to inflate their follower base, and start cleaning up the mirkier ends of the influencer marketing industry. Funnily enough, we’re doing a data teardown on one of these dodgy tactics soon, so check back next week.

Whatever happens, as this week Pinterest made their own Pin Collective totally self-serve (their own influencer and content creator network), surely other networks won’t be far behind on cashing in.

Jem @ This Here

P.s for now, we’re advising clients to stick with #Advertisement or #Sponsored tags (in local language) rather than use this built-in tag. We just don’t think the data is worth the risk until we can analyse how it affects performance (which, let’s be honest, it will).

We’re a data-fuelled creative agency (of the digital & social persuasion) with a 🇪🇺 European capability, a particular taste for influencer marketing, and a love for emojis 🙋 if that floats your boat.

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Sources

  • Banner Ads receive 0.05% CTR: Smart Insights 08 Mar, 2017
  • 80% of us follow a brand: Instagram internal data Mar 2017
  • $1.45 Billion investment in Influencer marketing Tools 2014–2016: CB Insights newsletter Jun 2017