Expect more ads on Instagram as founders quit

Increased focus on advertising revenue risks killing the goose that laid the golden egg: influencer marketing.

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The Instagram founders, Kevin Systrom and Mike Krieger, announced this week they are to leave the photo-sharing app.

Throughout their time with the platform both founders have focused on product innovation - most recently Instagram Stories & IGTV - over advertising revenue. As a public company its parent, Facebook, on the other hand, has needed to satisfy its shareholders.

Facebook has put Instagram under increased pressure to generate more advertising dollars as growth on its own platform stagnates and demographics age. 

Instagram is currently the powerhouse driving influencer marketing (or at least influencer advertising). But some of its 1 billion monthly active users are starting to complain about the growing number of advertisements and paid-for influencer content.

Instagram Stories

Instagram Stories has been a runaway success. Both influencers and brands like the Stories feature. Hyperlinks can be added to paid-for content. This helps brands build in meaningful Calls To Action and track their marketing performance. Influencers like the hyperlink feature because a swipe up to a product page can earn them a further cash incentive or a proportion of the product sale via an affiliate link.

Stories are also increasingly being used as an antidote to the perception of the social media platform being a ‘theatre of success’. Instead, Stories offer influencers a return to the essence of the influencer marketing discipline.  They offer an unvarnished, more relatable, honest view. As such the viewer regains that connection with the influencer. That sense that the influencer is someone like us; someone they can trust.

More adverts coming to Instagram

However what is good for brands and good for influencers is not necessarily good for Instagram. Stories contribute lower levels of advertising spend despite earning 400 million daily views. To combat this ‘deficit’ Instagram has been filling Stories with ad roll diluting the authentic impact of the feature.

Added to this Instagram Shopping - the feature enabling business to tag products in posts that link through to product pages on their eCommerce sites - is being rolled into Stories, too.

Why did Systrom and Krieger stay with Instagram a full six years after they sold their start-up (and two years past their earn-out period)? Their announced departure comes only months after WhatsApp founders quit. Facebook’s general counsel, Colin Stretch, head of communications, Elliot Schrage, and vice-president of partnerships, Dan Rose, also announced their departures over the summer. This suggests they didn’t stick around in salute to Facebook’s skilled management style.

A more likely reason is that they were allowed the luxury of autonomy from the parent company whilst Facebook’s business grew. As growth flattens Zuckerberg has looked elsewhere for advertising revenue to prop up the business. Eyes are now focusing on Instagram.

There is a danger with B2C influencer marketing - especially on Instagram - that the discipline will kill the goose that laid the golden egg. Too much paid-for content. Too much of that content following poor creative direction. Influencers working with too many brands. Too many of those influencers holding no affinity with the brands they promote. This all threatens to poison the well for the whole of influencer marketing.

So, Instagram’s owners are now faced with keeping happy three important groups: 

  1. The product developers 
  2. The users and
  3. The shareholders.

Focusing attention on shareholders to the detriment of product developers and users risks losing its place as the platform of choice for influencer marketing. Users could be turned off by the increased focus on advertising and an algorithm which appears to throttle organic content.

I wrote a version of this story earlier today and published it to LinkedIn.

About the Author Scott Guthrie

Scott Guthrie works with companies to drive business growth in the social age through strategic insight and technical know-how. That's not giving you a lot of detail, is it? So, read more here.

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