Digital & Social Media

Who Doesn’t Like a Kors Watch?

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What Happened: Instagram CEO Kevin Systrom gloated over what he categorized as “pretty tremendous” performance for the service’s first set of advertisements: Over 5 percent led to “likes.” Speaking at the GigaOm Roadmap conference, Systrom said the success of the advertising on Instagram is helping to move it from “a cool startup in Silicon Valley into something that affects the mainstream,” a TechCrunch article reports. Instagram currently has 150 million+ active users and 55 million photos are shared daily, Systrom told the conference.

One of the hottest ads was a photo of a Michael Kors watch sitting amid a pile of sweet treats and classy china on a table somewhere in Paris. According to TechCrunch, it attracted 6.15 million viewers and more than 200,000 likes. But the real question is whether the foray into advertising is turning clicks and likes into cold hard profits. The answer would seem to be a resounding “non.” “Are they making us hundreds of millions of dollars per day?” TechCrunch quoted Systrom asking and then answering his own question. “No, but that wasn’t the goal. We announced we’d take it slow doing it the right way.”

As TechCrunch points out, advertising is a novelty on Instagram, which could account for the likes and clicks. And as the social channel has made sure to convey that its ads will be natural and non-invasive, the pressure will be on to keep the commercial content engaging enough to generate consumer response. Unlike other services, Instagram even provides a “hide” feature with optional feedback, so the network can help tailor content to a person’s interests.

Systrom also discussed the future for Instagram other than advertising, and it may not be hashtags. He said the service needs to find a new way to let people know interesting things that are happening, like a riot in a famous city or the score at a sporting event, noting that his mom and others don’t necessarily like to search hashtags—or know how. Metadata about photos is another area, Systrom mentioned, with “proximity and location” representing opportunities.

What This Means for Brands: What’s clear is that almost every social channel is struggling with monetization of the service and a way to distinguish themselves from the other channels, even as they continue to pursue similar paths. Systrom also talked about needing a “central thesis” on what the service’s underlying benefit is. He said he didn’t think there would be a replacement for Facebook, Twitter or Instagram. That may be true. But what is beginning to appear more apparent as time goes on is that there probably has to be a saturation point, a juncture at which people feel overwhelmed and just don’t want to be on all these channels simultaneously. Then brands will have to start asking which services are integrated enough into people’s lives to survive. Social media hasn’t reached that stage of maturity yet, but kids grow up so fast these days.

Contributing to TRENDING are Lucy Arnold, Jenna Carter, Sarah Gordon, Lisa Helfer, MaryFrances Hicks and Abby Ray. Edited by Pat Wechsler.