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Instagram is coming for your credit card

There isn’t much I wouldn’t buy once I’ve been lulled into a stupor by my Instagram feed. New swimsuit? Obviously going to need that for all the beach ‘grams this summer. Aesthetically pleasing vitamins? Fine, whatever, I’m a sucker. Set of six hanging planters? Great excuse to give the whole not-killing-my-houseplants thing another shot.

Of all the social media platforms, Instagram ranks second in its power to influence purchasing decisions, according to a recent report by a leading market research group, and it has particular sway among young people and fashion shoppers (Facebook, with its broader overall reach, comes in first). It also has their attention: Users under 25 spend an average of more than 32 minutes per day on the app,.

Instagram’s value as a marketing tool owes a lot to the product itself: Its clean, uncluttered design keeps users focused on the glossy images and videos in their feeds. It’s also what has developed within it, namely an ecosystem of influencers and micro-influencers, sponsored content and painstakingly curated lives — in short, the kind of envy and aspiration that prods people into typing in their credit card info. Unlike Amazon, where shoppers tend to go when they have a product search in mind, Instagram’s advantage is discovery and the myriad ways a product can magically appear in front of a user, whether through a friend, an ad, an influencer, or the algorithmically generated serendipity of the Explore page.

Yet until recently, buying anything on Instagram was a virtual impossibility because of the app’s ban on links outside of user bios. In late 2016, however, the company began testing retail integration, and finally the marketer’s fantasy of a “shoppable Instagram” seemed within reach. Since then, Shopping on Instagram has grown from a niche tool available only to a few major brands like Warby Parker and J.Crew to one that’s open to hundreds of thousands of businesses in 44 countries.

If you use the app, you’ve probably seen the feature, identified by a little shopping bag symbol in the upper-right corner of a post. Tap the tagged product in the photo and the brand’s e-commerce site pops up, allowing you to check out without having to open another app. Soon, even this final step might be buffed away, as Instagram recently began rolling out a native payments feature, letting users pay certain brands directly through their feeds.

There isn’t much I wouldn’t buy once I’ve been lulled into a stupor by my Instagram feed. New swimsuit? Obviously going to need that for all the beach ‘grams this summer. Aesthetically pleasing vitamins? Fine, whatever, I’m a sucker. Set of six hanging planters? Great excuse to give the whole not-killing-my-houseplants thing another shot.

Of all the social media platforms, Instagram ranks second in its power to influence purchasing decisions, according to a recent report by a leading market research group, and it has particular sway among young people and fashion shoppers (Facebook, with its broader overall reach, comes in first). It also has their attention: Users under 25 spend an average of more than 32 minutes per day on the app,.

Instagram’s value as a marketing tool owes a lot to the product itself: Its clean, uncluttered design keeps users focused on the glossy images and videos in their feeds. It’s also what has developed within it, namely an ecosystem of influencers and micro-influencers, sponsored content and painstakingly curated lives — in short, the kind of envy and aspiration that prods people into typing in their credit card info. Unlike Amazon, where shoppers tend to go when they have a product search in mind, Instagram’s advantage is discovery and the myriad ways a product can magically appear in front of a user, whether through a friend, an ad, an influencer, or the algorithmically generated serendipity of the Explore page.

Yet until recently, buying anything on Instagram was a virtual impossibility because of the app’s ban on links outside of user bios. In late 2016, however, the company began testing retail integration, and finally the marketer’s fantasy of a “shoppable Instagram” seemed within reach. Since then, Shopping on Instagram has grown from a niche tool available only to a few major brands like Warby Parker and J.Crew to one that’s open to hundreds of thousands of businesses in 44 countries.

If you use the app, you’ve probably seen the feature, identified by a little shopping bag symbol in the upper-right corner of a post. Tap the tagged product in the photo and the brand’s e-commerce site pops up, allowing you to check out without having to open another app. Soon, even this final step might be buffed away, as Instagram recently began rolling out a native payments feature, letting users pay certain brands directly through their feeds.

Parent company Facebook is at a critical crossroads right now. In the wake of recent scandals — first Russian meddling in the 2016 election, then Cambridge Analytica — it’s under pressure from users and politicians alike to shore up its advertising practices and data handling. It’s promised (and promised again) to do a better job of vetting ads, including hiring at least 1,000 moderators specifically for the task. Europe’s GDPR has added fuel to the fire, changing the rules of how it and other companies can profit from user data. At the same time, the company is looking for additional revenue streams. Facebook already hoovers up 20 percent of all online ad revenue in the U.S., while Google takes another 40. The number of ads it’s able to show users within certain products started reaching saturation point back in 2016, and recent algorithm changes that prioritize content posted by family and friends have reduced the amount of time users spend on Facebook by about 50 million hours per day, or about 5 percent of total engagement. Now, Facebook is coming for retail, and Instagram shopping could be its golden ticket.

E-commerce is still potentially a major, mostly untapped opportunity for the company. It has offered shopping on Facebook Messenger since 2016, first rolling out a bot platform for the app, then adding features like VR capabilities and auto-translate, both of which were announced at this spring’s F8 developer conference. Facebook Marketplace, which lets people buy and sell goods locally, now boasts 800 million monthly users. And through Facebook Business Pages, retailers can set up a “shop” section that either links out to an external site or lets users check out on Facebook using Stripe or PayPal. (To get approved for shoppable posts on Instagram, brands also have to link their business profile to a product catalog on Facebook.)

The company doesn’t currently profit directly from the transactions that take place on any of these platforms, however, instead relying on the advertising dollars they generate. There are signs the company is taking its role in the purchase process more seriously, though: on Tuesday, it announced it will allow users to leave feedback when they buy a product through a Facebook advertisement, with the aim of curbing the problem of businesses using misleading images and quoting inaccurate shipping times to lure customers.

Other platforms have made attempts at social commerce, with varying success. Pinterest offers buyable pins. Snapchat has its Snap Store. For a time, Twitter executives pinned their hopes on a “Buy” button that no one used, eventually retiring it in 2017. Even Amazon, the undisputed king of e-commerce, is experimenting with a discover-geared social network called Spark, though it’s seen limited adoption so far.

So why might Instagram be a different story? For one, it’s ideally positioned for e-commerce: 80 percent of its 800 million users follow a business account, according to its most recent data (though this can include celebrities, media companies, and influencers who sign up as businesses). And some studies have found that the majority already make purchasing decisions based on what they see in their feeds. Plus, that pool of potential consumers is growing globally by the minute. A whole industry has blossomed on top of Instagram in recent years: Influencers get paid to promote brands, affiliate networks take a cut of the commissions they make, and retailers rake in significant sales from the referral traffic.

“It’s been our hypothesis for a while now that Facebook and Instagram would like to take more of a share of the e-commerce sales that are happening on the internet and also through social,” says Michael Nguyen, senior VP of product at ShopYourLikes, a monetization platform. “I do think that they will continue to make moves to try to capture more of the e-commerce share directly into the product.”

Prognostications about the company’s commerce plans are also bolstered by another recent change: In April, Instagram abruptly changed its API, cutting off many of the third-party analytics and influencer marketing services that relied on data from the platform to function. The move was initially planned to roll out in phases in July and December of this year, but it was bumped up (with no advance warning to most developers) following the revelations that political consulting firm Cambridge Analytica harvested the data of 87 million Facebook users.

For now, Instagram doesn’t take a cut of the transactions referred through or processed on the app, but some industry experts think this won’t be the case for long. “I could 100 percent see them start to think, ‘Wow, these affiliate networking programs are making a ton of money. Why aren’t we facilitating this in a way where we can reproduce that business model?'” says Mike Froggatt, director of intelligence research at digital research firm L2.

Instagram itself doesn’t deny the possibility, though it says it’s not in the company’s immediate plans. “We are not charging businesses for shopping on Instagram,” says Jessica Gibby, corporate communications manager at Instagram. “We plan to explore sponsored formats but have no news at this time.”

In the meantime, the benefits Instagram reaps will mostly be familiar to anyone who pays attention to the news. The more data it collects about what you, the user, are buying and browsing, the better-targeted the advertising it can sell back to brands; the less you need to jump over to a separate browser to shop a brand’s site, the more time you spend engaged within the app, which in turn makes Instagram more appealing to advertisers.

The changes aren’t good news for everyone, though, particularly for some shopping services built on top of the app and the influencers who used them — together the very people who made Instagram such a valuable shopping engine. Among those affected by the API changes was one of the few products to successfully work around Instagram’s restrictions to make influencer content shoppable: LikeToKnow.it, an offshoot of the affiliate networking company RewardStyle, which reportedly drove $1.1 billion in sales in 2017. While the company launched a standalone app in 2017, when Instagram changed its API, LikeToKnow.it’s titular service was effectively dead in the water.

For some LikeToKnow.it influencers, the revenue hit has been minimal, but for others the affiliate commissions represented the majority of their income.

But the ecosystem has always been a delicate one, with Instagram holding most of the cards and users and businesses forced to adapt to survive. The platform’s shift from a chronological feed to an algorithmic one a few years ago, for instance, was effective at helping the company monetize, but it slashed engagement for many users who relied on it for income.

“Sometimes you just want to throw your hands in the air and give up because you work so hard on something and the Instagram algorithm changes and suddenly people aren’t seeing your content,” says Michelle Zuzek, the founder of the fashion blog Style Beacon.

The recent API changes — which were implemented in part to prevent spammy practices like users programmatically following and unfollowing accounts to gain followers — could make the environment even more hospitable for shopping, says Jimmy Duvall, chief product officer of e-commerce platform BigCommerce, which has partnered with Instagram to allow its merchants to integrate their catalogs. The more closed-off API “really does a lot to keep the network as clean as possible, as pure as possible,” he says, “which from a commerce standpoint is an absolute necessity. The first thing that will go wrong in the commerce world is when consumers start to feel manipulated or they start to feel that they’re not safe, so Instagram has a huge incentive to keep that ecosystem as clean as possible.”

Froggatt predicts that Instagram will eventually start to take a cut of e-commerce sales to compensate for the fact that ad revenue can’t continue to grow forever at the astronomical pace Facebook’s shareholders have become accustomed to. Even if Instagram continues its rapid growth by adding new users and charging higher prices to brands, “continuing to optimize those advertising algorithms is only going to provide small percentage gains,” Froggatt says, “so I can see that under pressure, they’re going to have to look for other sources of revenue.”

And while shopping on Instagram will likely always be very different from shopping on Amazon — no one’s going to their feed to restock on canola oil or determine which paper-towel brand to bulk-buy — if the social media platform gets it right, Froggatt says, the e-commerce behemoth could eventually feel the impact.

“In the end,” he says, “it comes down to convenience: Where can consumers get products that they want?”

Hilary George-Parkin is a freelance journalist who covers fashion, culture, and technology.



FONTE : VICE News

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