It’s been an exciting fortnight for Instagram. The social media site hit the 400m user milestone in September and now, on the 6 October, it celebrates another landmark; its fifth birthday.When Instagram launched it had 25,000 users. In five years, Instagram has powered to social media success, quite simply, because it offers a fantastic user experience. Consumers love it because it feels real, it’s beautifully simple and a rich and creative way to tell stories. The social media site is also a powerful ally for advertisers, offering them the opportunity to reach a new audience and build a community, raising awareness and even shifting perceptions. With 400m users, Instagram’s current challenge is to make money for itself from this huge consumer audience. The company started accepting its first paid advertisements in the US in 2013, before expanding to the UK in September 2014 with brands including Waitrose and Channel 4. Big budget advertisers across the world have become a vital revenue stream for Instagram and there is a great deal of pressure to sustain this momentum. eMarketer’s first report on the photo-sharing mobile app has predicted that the social media site will generate almost $600m in ad sales this year. The research firm also forecasts that Instagram will earn $2.81bn in ad sales by 2017, outselling Google and Twitter when it comes to US display ads – an enticing figure for advertisers looking to leverage Instagram as a selling channel.
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But Instagram isn’t all about selling. It’s about brand loyalty, sharing and community-building too. There has been a continuous fear among the founders that increasing the influence of advertisers will turn users off the social media site.After all, when the Instagram community first saw sponsored images, there was a fair amount of backlash from consumers who didn’t welcome posts from brands they weren’t following. It’s not surprising therefore that the development of Instagram’s advertising offering has been a gradual one to help reassure customers they intend to enhance, rather than disrupt, the user experience. As it’s so visual and fashion-oriented, Instagram is an ideal platform to shop on and many are citing its potential to become a dedicated retail hub. With recent advertising updates including sponsored images, videos, automated tools for delivery and measurement as well as “buy now” and “learn more” options, it seems that the founders agree. In particular, the opportunity for Instagram users to click directly through to a product provides instant gratification for customers and removes cumbersome steps in the path-to-purchase. For example, if I see a red handbag when I’m browsing the ASOS Instagram page, the idea that I can click right through to the ecommerce site and make my purchase is pretty appealing. In this way, Instagram really captures line-of-sight marketing for the digital age. Instagram boasts an astute business model and with a rapid growth trajectory it will be interesting to see what the social media site does next to keep serving consumers and brands – not many platforms can boast such a highly engaged community, and this unlocked potential is surely enough to set the company on course for further innovation. Hannah Kimuyu is the director of paid media at digital marketing agency Greenlight
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