Monday 14 October 2019

Steve Dempsey: 'Instagram lines its pockets as it ends Wild West for influencer marketing'

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Steve Dempsey

Steve Dempsey

Way back in the early days, Facebook promised brands a platform for dialogue with customers. This was before it throttled organic reach for non-paid posts, became a paid advertising channel, and before it started building one of the most effective advertising products ever. And ever since, if you want to play with Facebook's toys, you've got to pay.

Strangely, that isn't the case when it comes to influencer marketing. And with its one billion monthly active users, visual interface and product laden posts, Facebook's Instagram is the top social platform for influencers. Instagram's ad revenues for last quarter are estimated at $2bn (€1.78bn), or about 15pc of Facebook's overall $13bn ad revenue for the same period. But that doesn't include influencer marketing, where brands give money directly to Instagrammers to showcase their products. Influencer agency Mediakix has estimated Instagram's share of influencer marketing will be worth $1.7bn by the end of this year, amounting to 4,953,063 sponsored posts. No wonder Zuck wants a cut of the action.

Instagram's latest innovation is designed to give him just that. It's called branded content ads, and it will allow brands to sponsor posts created by influencers, celebrities and publishers. Instead of reaching only the followers of the influencer in question, branded content ads will allow the advertisers to promote these Instagram posts just like they would any other ad. Instagram says it's all part of the platform's strategy to connect advertisers and creators in more formal partnerships. A formal partnership, of course, means one controlled by and primarily of benefit to Instagram.

But there are problems - and it should be said they're specific to all influencer channels, not just Instagram. One issue is fake followers. Apps that automatically follow then unfollow users or leave a multitude of comments have been used to artificially inflate the reach of some influencers or the likes and comments that their posts have garnered. Instagram regularly purges fake followers, with the most recent taking place in February. Influencer marketing agency Captiv8 recently estimated that at least 11pc of all the reactions that brands pay for come from fake accounts.

Another issue relates to transparency and advertising standards. The Advertising Standards Authority of Ireland (ASAI) wants influencers and bloggers to flag marketing content with hashtags like #ad or #sp to let audiences know when money's changed hands. Some 107 complaints were made to the ASAI last year about bloggers not being clear with their audience.

Things are a bit more robust in the UK. The Competition and Markets Authority (CMA) is trying to apply consumer protection legislation from 2008 to influencer marketing. This would mean that influencers would need to state clearly if they have received payment for products they endorse or if they've been promised any payment in the last year by the relevant brand. They'd also need to ensure that they're not making any claims about the product if they haven't used it. In cases where an influencer fails to comply with the requirement to identify payment, the CMA is able to take action including applying for a court order, which could eventually lead to a fine or even imprisonment. And the UK is more stringent about hashtags than here. The CMA and the UK's Advertising Standards Authority produced a set of guidelines that specify that the tag '#ad' is valid, but shouldn't be buried at the end of a post in a host of other hashtags.

Last year at Cannes, Unilever CMO Keith Weed, who is one of the sharpest minds in marketing, warned that trust needed to be rebuilt across the digital ecosystem including influencer marketing. He called for efforts to clean up the influencer ecosystem by removing misleading engagement; making brands and influencers more aware of dishonest practices; and improving transparency from social platforms to help brands measure impact. "We believe influencers are an important way to reach consumers and grow our brands," he said. "Their power comes from a deep, authentic and direct connection with people, but certain practices like buying followers can easily undermine these relationships."

And while Instagram's new branded content ads are undoubtedly a land-grab, they do offer a trustworthy approach to promoting posts that promote products. This is a good thing for consumers and brands. It may not be such a good thing for influencers, however, who will see less money given directly to them, and more into social media advertising systems. Kylie Jenner, who reportedly charges $1m for an Instagram post, will be fine. But the smaller micro influencers (up to around 50,000 followers) will find it harder to make a living shilling out on Instagram.

This seems to be the general rule of online economics; the big guys will be fine, the smaller players will struggle.

Sunday Indo Business

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