Instagram Photo Tags and the creation of a commercial ecosystem
Instagram has announced the launch of Photo Tags, which allows users to tag any item that appears in the photographs they upload, providing an additional layer of information that other users can click if they want to purchase the item. The format provides a glimpse of the possibilities for monetization that a platform of this kind, originally created to edit and share photographs, could have, and how it might shape electronic commerce.
Since its acquisition for $1 billion in April 2012, a price that some branded too high, Instagram has become a booming business that is expected to bill more than $3.2 billion this year, and one that brands generally appear very happy about. Ads on Instagram don’t seem to bother most users, who largely see them as being consistent with the platform and not intrusive at all, allowing brands to obtain a measure of the acceptance of their campaigns through Likes feedback and comments, along with the development of communication channels with users who choose to follow specific brands. Now, in addition, they can use those ads as a gateway to stores or distribution channels on the web, which not only means more sales, but also provides significant opportunities for the acquisition of business intelligence, to understand what works or doesn’t work not just in terms of Like, but the “moment of truth” when the potential customer is no longer just potential and buys.
The new functionality also allows brands to extend the ability to tag photos to influencers or ambassadors of their products, which some already were doing by offering links or photo captions, but can now do in a much more natural and direct way. The development of the idea will allow eventually the concept of influencers extend beyond what we now know as such, who a lot of the time seem mere mercenaries or human billboards, leading to a new type of influence based on something more informal, more casual, more genuine: take a picture of something, consider that it may represent an evocative and attractive image of a product, and label it with permission of the corresponding brand to see if, indeed, it works and allows the user to generate some income according to their popularity. Imaginative brands, able to see beyond the tight control some companies exercise over the way their products are branded and who simply count the number of followers they have to assess influence, could well generate some interesting results.
A development of this kind raises the possibility of creating an entire ecosystem along similar lines — if not in magnitude, at least in conceptual terms — to what Google did: associate contextualized advertising with users’ searches. This system, originally developed by GoTo.com and copied by Google (the company had to negotiate payments with the then owner of GoTo.com, Yahoo!, for a perpetual license to use its technology). This led to AdWords, which today generates more than 75% of company revenue.
The idea of a model along the lines of “I develop an activity, and others overlap an economic model over it” could put Instagram’s potential to the test: this is a network where we have any number of influencers across a wide variety of segments thrive. Using visual stimuli to evoke, suggest or trigger a buying process is obviously not a new idea, nor is adding layers to a picture or video that can be activated. But doing so on a platform with the dynamism and strength of Instagram, where we have already seen potentially could ideas tested, could turn out very well.
Facebook has come up with a great idea here: give an app an additional business model it already had with advertising, without spoiling the value proposition for the user. Anybody who thought $1billion was a very high price for an app without a clear business model, should think again. Business models are not always apparent, don’t always annoy the user (well-conceived ones usually do not) and are not always what they seem.
(En español, aquí)
