Instagram Joins the Social Commerce Bandwagon

Earlier this week, as Pinterest announced its Buyable Pins, Instagram joined the social commerce world with its Shop Now buttons, in the hope of convincing its 300 million monthly active users to shift from browsing to shopping on the social network.

Facebook, which bought Instagram in 2012, has kept the mobile photo-sharing service mostly free of advertising, allowing only a handful of big brands to put a few carefully drafted commercial messages on the service through Sponsored Ads. But later this year, all advertisers will be granted access to the Instagram feed.

“Who are brands obsessed with? High-income teens and people in their 20s,” Scott Galloway, a New York University Marketing Professor and Chairman of research firm L2, told the New York Times “Those people are leaving Facebook. Where are they going? Instagram. Facebook has shored up its rear flank with this important cohort with Instagram.”

Facebook and Twitter both began testing similar shopping buttons last year, and Google recently announced its intention to join the trend confirming a Buy button will be available to mobile shoppers in the not too distant future.

In additional to broadening the scope of revenue generation from purely traditional means of advertising, Instagram’s new ad format provides advertisers with the ability to use data gleaned from the shopping experience to better target ads to the right people, by interest, age, gender and other factors, just as they can on Facebook.

Following the announcement, users on the social network with now see buttons that read “Shop Now”, ‘”Install Now”, “Sign Up” or “Learn More” below an Instagram image.

Consumer brands and retailers have been chomping at the bit for these clickable call to action buttons as currently the experience is clumsy, especially on mobile phones, when users are forced to cut and paste a link into their browsers or search directly on a retailer’s site for the product in question.

Jeremy Jauncey, Founder of Beautiful Destinations, the most followed travel brand on Instagram told Skift, “100 percent, I’d bet my own money on it. We have always believed in the power of Instagram and with increased audience visibility and enhanced targeting brands can now track meaningful ROI, conversion and engagement from the efforts they put into the platform. Given the inherent nature of travel is visual and social, we strongly believe travel brands will pour more money into advertising on Instagram.”

Yet while advertisers may be excited by the prospect of an extra revenue scheme, the commercialisation of Instagram is sure to disappoint some users. The service’s Founder, Kevin Systrom, who still runs the service within Facebook, built it to be a place to relax and appreciate beautiful photos and videos posted by people and companies that users have chosen to follow. When Facebook bought the company for US$1 billion, Mark Zuckerberg, Facebook’s Chief Executive, said he wanted to preserve that experience.

Instagram insists that it is treading carefully to balance the desires of its advertisers and its users. “Visual storytelling for brands has more resonance. People remember it more,” James Quarles, Instagram’s Global Head of Business and Brand Development, told the New York Times. “But we want to make sure the ads they see are for things that matter to them.”

But with the major social networks like Facebook, Twitter and Pinterest committing to keep their services free to users, they have turned to advertising to generate revenue. One Wall Street firm, RBC Capital Markets, has estimated the ads could bring in US$1.3 billion to US$2.1 billion in additional revenue to Facebook this year alone, depending on how quickly its new ad offerings are introduced.

Many retailers have already been using third-party workarounds to make Instagram ‘buyable’. Visitors to the Instagram pages of Target, Nordstrom, Forever 21 and Williams-Sonoma can click on a special link that the store posts in its account description that leads to a mirror image of its Instagram feed where photos are clickable and link to product pages where a shopper can buy the items.

Quarles is being cautious about promising the ability to embed a link within an actual post: “Instagram will begin testing such ‘call to action’ buttons soon, but only in ads and only in Spain.”

Users will see call to action buttons beneath Instagram images, allowing them to click through to buy or find out more.
Users will see call to action buttons beneath Instagram images, allowing them to click through to buy or find out more.

With both Pinterest and Instagram launching social commerce buttons this week, experts have been sussing out the pros and cons of each highly visual digital destination as a shopping platform.

Pro Pinterest

“I think there is a distinct difference between Pinterest Buyable Pins and Instagram Shoppable Ads,” Bill Tancer, an Online Behavioural Analyst, told AdWeek. “The images pinned by users in the Pinterest [environment] are, in most cases, well positioned in the transition between viewable image and desire to purchase — given prevalence of apparel, design and recipe pins. Instagram, by contrast, hosts images that are more social in nature with a more tenuous connection between photos and e-commerce than Pinterest pins.”

“Instagram will be a harder sell [than Pinterest] because its users are generally in a place of inspiration and discovery,” said Jill Sherman, Svp, Social & Content Strategy, DigitasLBi. “My guess is that purchase behaviour will likely be impulsive, so scarcity — like limited time and quantity — will be necessary to capitalise on this audience at first.”

“Pinterest has users’ mindset on their side, which is a huge selling point to brands,” Sherman said. “People using the platform are generally in planning mode, so they’re likely closer to place of [purchase] consideration. They’re searching for things like ‘how to decorate a modern nursery’ or ‘best camping gear for humid weather’ to create their inspiration boards, so adding a buy button simply creates one less step in the path to purchase.”

Pro Instagram

“Facebook and Instagram have so much data on their users that they will be able to serve shoppable ads that are very relevant and, as a result, will have a higher e-commerce conversion rate,” said Mike Purzycki, Chief Business Officer at fitness platform Fitmoo. “The algorithms behind the ads that are being served will determine the success of their e-commerce efforts.”

“For Pinterest, retailers have to apply the buy buttons to their pages themselves, which — if they don’t add the feature en masse in the coming weeks or months — could lead to confusing expectations for consumers,” Purzycki said. “Users might find it disappointing when they discover an item that they like but they are unable to purchase. Traditionally, finding something you like on Pinterest triggers a positive emotion and is punctuated with a positive user experience. If the discovery process is punctuated with the inability to purchase, then users’ experience might suffer.”

Will your brand be taking advantage of the new revenue stream opportunities provided by Instagram and Pinterest?

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