The platform is bringing more tools to businesses in the coming months, introducing business profiles a la Facebook, which bought Instagram in 2012. It could be a game-changing move for what’s become the fashion industry’s go-to app. Instagram plans to start providing brands with analytics about content and businesses will be able to create and place their own ads from within the app for the first time. This will help brands maximize their exposure on the app and differentiate themselves.
“Instagram needs to make money and brands want to be able to push content in a way that they can control,” said Sucharita Mulpuru, vice president and principal analyst at Forrester Research. “It may not be what users want, but it’s what brands want. And they are happy to pay for it.”
Instagram’s following not just Facebook, but Snapchat and others, by offering more commercial-friendly treatment for advertisers.
“They have brands and brands are trying to find ways to create content,” Mulpuru said. “It’s a different flavor from Facebook, but the idea of branded content [is the same]. Snapchat has shown it’s a revenue channel and it hasn’t alienated anyone so that their growth has suffered as a result. The bigger question is: My god, it’s taken them so long to do this? Companies like Snapchat seem to be stealing their thunder.”
While the new approach could be great for the brands and retailers that have followings in the several hundred thousands to millions, it could also undercut some of what helped Instagram gain popularity in the first place. The picture-sharing platform has been lauded since its inception for the organic nature of its feed, where users can view posts of celebrities, regular people, influencers and brands based on posting order.
“Instagram has to be customer-centric and continue to deliver the experience that consumers have learned to expect,” said Mary Beech, executive vice president and chief marketing officer at Kate Spade & Co., calling it the “premiere destination” for people looking to share imagery and words. “That is the critical nature. I hope Instagram remains brand- and customer-centric in their efforts.”
She said Kate Spade started paying for advertising on Instagram, where it has 1.6 million followers, last year, and focuses the majority of digital advertising spend around three to four larger campaigns a year. While too early to know what exactly the new Instagram products will look like, Beech said the team will meet with Instagram and assess their strategy.
Jan-Hendrik Schlottman, chief executive officer of Derek Lam, plans to do the same.
He said the brand will roll out its first sponsored Instagram posts next week and will create business profiles depending on how they are designed and what they will look like. The company brought the production of its footwear collection back in-house last year, and promoting the spring collection is a priority.
For him, the upside to Facebook and now Instagram is that a marketer can very precisely target users. Schlottman listed the targeting criteria for next week’s Instagram ad launch: women who are interested in fashion, are heavy shoppers, ages 28 to 50 and are fans of Gianvito Rossi, Prada and Gucci. The next week, Derek Lam will target users who follow Jimmy Choo and Louis Vuitton.
“We can see which women react to the shoes the most. Not because we want to emulate what other shoe brands are doing, but because we want to see who we are going to target,” he explained. “We have the hope that Instagram is somewhat more ‘fashion’ and that it will be more exciting even than Facebook.”
Facebook has been Derek Lam’s most effective digital advertising tool in terms of return on investment. Fifty percent of the brand’s monthly online marketing spend goes to Facebook (30 percent goes toward search engine optimization). So even while Schlottman acknowledged that Instagram is more aspirational and sexy than its parent company, Facebook still wins when it comes to purchasing power among female Facebook users of a slightly older demographic.
Although this is a step that’s widely seen as necessary for Instagram as a business, it does set the platform on a path with some risk.
“Facebook doesn’t seem to have been impacted [by advertising], but if you actually talk to people in fashion, Instagram is certainly the more important platform of the two,” said Oliver Walsh, chief marketing officer of Aritzia. “What they have to be careful of is making sure that it remains the most powerful platform for the fashion and luxury industries.”