Advertising Killed the Instagram Star

Winter is coming quickly for Instagram’s thriving influencer community, unless they can shift the role they play for brands.

Instagram’s recent decision to open their ads API signals a shift in the platform’s position?—?historically anti-advertising and protective of the user experience?—?toward empowering advertisers to reach their audiences at a democratic price point. This shift may come at the expense of Instagram influencers, a group benefiting from gated advertising access and high pay-to-play price tags.

Until now, paid marketing on Instagram has been a social media no-man’s land. Unless you were backed by a large global brand?—?one who could afford to drop 200k on an Instagram ad campaign?—?there was no paid option to amplify your content or acquire new audience members. For many social media managers and less Insta-savvy practitioners that meant it was really, really hard to see measurable impact from Instagram even with a budget to play with. The gates were up, and SMB marketers were left out in the cold.

Spending on influence

Smart marketers can spot a trend from miles away, making Instagram’s rising user counts and class-leading engagement metrics an attractive playground. But with Instagram’s ad policies locking out brands without massive budgets, many brands had no options for building a presence on the platform or amplifying content. Enter influencer marketing. Partnering with influencers attracted small and medium-sized brands like crazy, for one main reason: partnering with influencers was cheap.

Well, sorta cheap anyway. Instagram style blogger Danielle Bernstein (better known as @weworewhat) reportedly pulls in six figures from sponsored content partnerships, working with blue-chip brands like Lanc?me and Virgin Hotels. While she’s picky about who she works with, brands can place content with her for as little as $5k.

Compared to dropping $200k for an ad campaign with Instagram’s account managers, influencers like Danielle often work for product (with CPG brands in particular) or small financial compensation, essentially functioning as brand channels at a reasonable price point. Depending on the relationship, brands could see meaningful ROI for the cost of a barter transaction or an in-kind sponsorship.

This influencer marketplace empowered many more brands to effectively purchase reach and resonance for their messages, functioning as the equivalent of low-barrier ad platform. These smaller transactions with influencers added up to one heck of a big opportunity?—?Harpers Bazaar shared analyst estimates suggesting that brands spend more than a $1 billion per year on sponsored Instagram posts. That’s a LOT of potential ad revenue.

Winter is coming

Those barriers to entry worked in the favour of influencers, making partnerships the most cost-effective way for brands to increase reach. But now, the walls are coming down. As Facebook (Instagram’s parent company) opens up ad buying to everyone, we’re seeing a democratization of access. Ads are easily purchased, offered in the same platform as Facebook Ads with the same ease of use and targeting options familiar to Facebook buyers. It’s a streamlined process, accessible to businesses of any size and budget.

And it appears to be effective. Ad-buying firm Kenshoo demonstrated strong performance from early testing, showing that Instagram’s ads average around a $6.70 cost per thousand impressions and $0.51 cost per click?—?both significantly lower than either Twitter or LinkedIn advertising and rivaling Facebook Ads for ROI. Kenshoo also found that people click on Instagram ads 2.48% of the time that they see them, two-and-a-half times the average for social ads.

If that traction continues as Instagram ads mature, Instagram will be an attractive place for brands to spend marketing dollars. With pay-to-play barriers dropping, brands will reallocate their spend?—?away from working with influencers and into advertising. It’s already happening slowly, but it’s happening.

The changing role of influencers

While this shift is concerning for Instagram’s influencer community, it doesn’t mean the end of partnership marketing on the platform. What it does mean is that influencers will have to pivot their role for brands from being the amplification channel toward acting as purveyors of expertise, trust, and social proof.

Smart marketers are working with Instagram influencers to help maximize the impact of Instagram ads, not just by co-authoring content and campaigns but by leveraging their partners’ expertise to craft advertisements that engage and inspire their communities.

Vancouver-based agency Stay & Wander leads this new breed of influencers doing just that, working with brands to create content “that consumers look forward to seeing.” Founded by Instagram early adopters and photographers @maurice and@alexstrohl, Stay & Wander exemplifies this evolving model of influencer/advisor, working with brands to optimize ROI of organic and paid opportunities within the world’s most visual platform. As they put it, they “connect the dots between influential content creators, widely-read publications, and content savvy brands.”

In a post Insta-ad API world this is the new role of the Instagram influencer. Savvy influencers will evolve their model past pure amplification to integrated service offerings, and will continue to drive value for brands, arguably even more so. Less savvy influencers will find themselves north of the wall in a world they once owned, left out in the cold by the very forces that allowed them to thrive in the first place.

Just getting started with influencer marketing? Ask yourself these three questions to start building a smart strategy.