Many companies that have tried to tackle social commerce over the past few years have came and faded out. Companies like The Fancy for example, created an excellent discovery experience for unique and high luxury items but the site failed to really leverage social interactions to drive real everyday purchases from its users.
Fast forward to today, and there is real hope for social commerce through the 800-pound gorilla in the social mobile space, Instagram. As a social platform, Instagram may seem like an unlikely candidate to succeed in the commerce space as historically (relatively speaking) social platforms have not had much success integrating commerce into their ecosystem. However, Instagram is different. Instagram is uniquely positioned because more than just a way to interact with friends or keep on-top of trends, Instagram is the world’s visual content sharing and discover engine making it the perfect fit for brands to share. Coming from the fashion industry, I have seen a transition away from brand websites being the host of their lookbook to Instagram becoming the new home where their lookbooks lives. This means that a brand’s website is nothing more than a shopping cart and checkout button. To date, the flow from a brand’s Instagram profile to a purchase has been clunky at best requiring users to go the brands bio, leave the app, click to that they’re leaving the app, launch a browser, wait for it to load, and then navigate a site. By making posts shoppable, Instagram isn’t trying to change user behavior it’s just further simplifying an existing one.
So the big question- what does this mean for influencers? Influencer marketing to date has been benchmarked by upper funnel KPIs such as reach, views, and engagement/interactions. Publishers, creative companies, and PR shops have quickly accepted and adopted these benchmarks for measuring success. However, the digital media buyers and DR shops have been left scratching their heads a bit when it comes to upper funnel KPIs that are more focused on brand building than conversions. This may all change as making Instagram shoppable means that advertisers will have a more direct funnel meaning more of what influencers achieve will be more visibly attributable to brands’ bottom lines.
What does this mean for brands? Though people won’t buy CPG brands like Coca-Cola online, this may open up the door to a new set of clients who have been strictly conversion focused to more heavily invest in Instagram, and in interaction drivers like influencers. This could mean that influencer marketing will be a more viable option for those obsessed with direct response marketing and tracking.
Tracking individual influencers performance will still be difficult. Unless influencers are selling products directly from their own content, attribution for a brand will still be difficult. There is no way currently of telling which influencer drove a specific user to a brand’s account let alone a purchase. Additionally, Instagram’s API doesn’t offer data to any third party on the identity of specific users that are following influencers or brands and definitely doesn’t offer transparency into sales data.
How could this affect influencer pricing? From a marketing standpoint, influencers do much more than simply drive traffic, they build brand equity and establish brand positioning. This means that the dollar value of the sales they generate isn’t inclusive of all the value they create and they, therefore, can’t not be compensated simply based on sales generated on a given day. However, the additional transparency will lead to some adjustment towards influencer pricing. Many influencers who have based their pricing on assumption and bias will likely have to decrease their rates. Others who may be undercharging may find that the added transparency may justify an increase in their rate.
Instagram’s recent entrance into the social commerce space is a great first step towards monetizing the platform in a way that’s organic and unlike ads, doesn’t take away from the user experience. Influencers aren’t going anywhere and for Instagram and platforms like it, influencers are key content creators that add value by keeping users engaged. In terms of what Instagram can do to better leverage influencers, anything that allows influencers to better monetize their audience will keep influencers tied to the platform.