How will Instagram’s new tools affect influencer marketing?

by Vanessa Guzek

Influencers have a harder time gaining followers on Instagram than on other platforms. Initially, Instagram’s algorithm offered content to users in chronological order but now it is based on user behavior. As a result, most influencers do not find it as lucrative and favorable as other platforms.

To benefit influencers, most of the social media giants have made some offers, especially in the last year because of COVID. TikTok for example offered a $200 million influencer fund, with plans to grow to $1 billion over the next three years. Snapchat introduced “Spotlight” to compete with TikTok, and offered $1 million a day to users whose content went viral. YouTube announced a $100 million fund for content creators who make short videos called “Shorts“. Even audio startup Clubhouse is launching monetization tools for influencers.

To get influencers’ content to followers and to make more money through Instagram, Facebook announced in late April the launch of new Instagram tools, including a marketplace that will help establish a link between brands and Instagrammers whose material matches the audiences they want to reach and will allow influencers to get a cut of the sales of the products they share.

“People look to creators for recommendations on what’s good, especially on topics they are experts in,” said the Facebook CEO, without specifying when these new features will be implemented.

In addition, influencers will be able to have “Creator Shops” on their profiles, a feature that was previously only available to brands. These are virtual stores where influencers will be able to sell their products to users directly from the social network.
“This has been especially important in the last year. Many physical stores have had to close during the confinements, but the internet remains open,” said Mark Zuckerberg, adding that “it can be a more personalized and convenient experience.” Finally, Zuckerberg also mentioned affiliation as a source of revenue for influencers, “Creators should be able to get a cut of the sales from the things they recommend, and we should create an affiliate recommendation marketplace to make that all happen”.

Although the updates come after competing platforms have introduced similar initiatives, Facebook and Instagram are still important enough to influencer businesses that their new tools should be embraced by them in a “better late than never” sense.These new tools for Influencers on Instagram are not yet available, but upon launch, they will represent a drastic change to the way influencers currently earn their revenue. Influencers with a smaller group of followers could be getting more interesting for brands.

All of these new Instagram features actually already exist, they’re just provided by third-party companies, which have helped grow the influencer economy, giving Facebook’s platforms a boost in the process. But given that Facebook will soon be offering many of the services it provides internally, there’s a risk that influencers will decide to use those tools instead, leaving these companies in trouble.

While analysts believe the new tools will be beneficial to influencers, these tools could affect existing businesses that work as SaaS (“software as a service”) or “click and buy” marketplaces, where brands pay to be connected with influencers in an automated way. But the impact is likely to be intense only for companies whose businesses are disproportionately focused on Facebook platforms.

Companies that operate with a broader approach to influencer marketing – both in the platforms they work with and the services they provide – believe they are less susceptible to Instagram’s changes. ITB Worldwide, which offers influencer marketing services in addition to other creative and marketing services, sees Instagram’s new tools as a “complement” to its business, said managing director Emma Shuldham.“We’re in the business of influence that’s data-driven, but it’s the human insights that will ultimately be what services our brands and our clients,” she commented. 

The idea of basing influencer activity on a single platform once Instagram launches its new tools – such as its potential function of providing a marketplace between brands and creators – may be attractive to fashion brands. However, in practice, fashion brands’ approach should be to incorporate other platforms for influencer marketing to reach a broader audience. So even if they encroach on the territory of companies that provide influencer tools, these updates are unlikely to be a death sentence, as the economics of influencer marketing will become less and less dependent on Facebook-owned platforms. 

In the meantime, while the details of Facebook’s marketplace tool are still unknown, such as what percentage of a sale influencers will receive from their followers’ purchases, it seems less of a threat to competing companies in the influencer marketing space, where influencers receive a commission from the products they promote and drive sales. Given the convergence of user experiences across social media platforms, it is likely that all social media platforms will eventually follow Instagram’s lead. However, the consequence of this will be less efficiency for brands and influencers, who will then have to manage stores on several different platforms instead of one.

We will follow with great interest the real impact Instagram’s new tools will have on influencer marketing. 

Related article: The Code of Conduct on the use of influencers in advertising

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