It’s been an eventful year for Instagram.

April 2012 saw the purchase of the photo sharing service by Facebook for $1 billion, a scant 18 months since Kevin Systrom and Mike Krieger launched the service from a drafty office in San Francisco.

December saw the debacle surrounding its updated terms of service, which granted it the right to sell users’ photos without notification or compensation. The resulting uproar led to a hurried retraction but not before a proportion of users had jumped ship to rival services.

By March, the service had recovered to the extent of announcing they’d hit the milestone of 100 million monthly users for the first time, a number which put them within striking distance of higher profile social networks like Twitter (200 million active users) and Google+ (340 million)

And this month saw the launch of their new photo tagging feature – a move they hope will grow the services’ popularity amongst people and brands.

That’s not to say that Instagram isn’t a well used service amongst brands – it is, certainly amongst blue chip brands. 59% of Interbrand’s top 100 brands are signed up to the service and that includes a number of leading luxury brands.

Burberry’s account, which mixes aspirational product photography with images of London - to reinforce its British heritage – has over 800,000 followers. Tiffany & Co, a brand who’s breathtaking images have no need of Instagram’s famous filters, have over 500,000 followers as have Gucci, whose popularity derives less from their own images and more from the pictures their followers share using the #gucci hashtag.

Why is Instagram such an attractive environment for these premium and luxury brands? 3 reasons. 

Firstly, there’s the audience – although the app is now available on Android, it started its life on iPhones and iPads, and most of its users are still iOS based.  Apple devices are a great filter for premium and luxury brands as their owners are likely to have more money in their pockets.  But the audience isn’t just affluent, it’s young and affluent. Instagram’s usage is impressive amongst the 18 and 29a and 30 to 39s - a reason why fashion brands have been the ones most likely to grasp the opportunity it presents. And, of course, those that create and share great image content are likely to have the heightened sense of the aesthetic to which the craftsmanship of luxury brands appeals.

Secondly, there’s the nature of the content – photos – the natural currency for luxury brands who have beautiful things to showcase.

Thirdly, there’s the potential that Instagram presents for high quality user-generated content that can be shared across other social networks – with the creator’s consent, of course.  An image literate community are more likely to generate the sort of content that premium and luxury brands will want to showcase across other networks.

And the recently announced photo tagging feature has the potential to both broaden and deepen the relationships between premium brands and their consumers on Instagram.  Users will be able to tag their photos with the @ handles of their friends as well as the @ handles of brands.  Tagged photos will form the basis of a new ‘Photos of You’ section on a user’s or brand’s profile page, although users and brands will be able to decide if the tagged photo is displayed or not. 

Not only will this new feature help to virally grow brands followings, as users’ followers see them tagging the brands in their images, it also creates a natural and easily accessible stream of user-generated content that will automatically showcase on each brand’s profile. Previously, brands had to hope users employed easily indenfiable hashtags when posting pictures of their products and manually search for that hastagged content.  Now that content will come to the brand automatically, and probably with greater frequency.

That’s the present – and its enticing enough for luxury brands – but the future is interesting too.  As each user tags their photos, Instagram will build up a broader picture of their brand preferences and interests.  With the launch of geotagging and photo maps last year, Instagram is already building up a picture of their geographical movements and the places of meaning to them.  Each new initiative helps to to build a better picture of who users are, and what advertising might appeal to them.  It’s an inevitable step – Facebook will want payback on their $1 billion investment, after all – and one that became all the more likely after the abortive move to make Instagram a user-generated Corbis back in December. And with the average Instagram user following less accounts than the average Twitter user, the extra content that advertising provides, if well targeted, could be more welcome.

The last 12 months may have been interesting for Instagram but the next 12 months could prove to be more interesting still for the luxury brands who seize the opportunity.

By: Neil Cunningham

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Insight into how affluent consumers use social media has been thin on the ground, particularly when it relates to complex luxury purchases.  But a recent study on the social media behaviour of ‘mass affluents’ (defined as those with assets of $100,000 to $1 million, excluding the value of their homes) produced by Cogent Research sheds some light on this little researched area.

Before we delve into the research and its findings, it’s worth sharing a few caveats upfront.  Firstly, Cogent’s research was carried out in assocation with Linkedin, so it’s not entirely independent.  Secondly, it’s based on US affluents rather than those in the UK – although in our experience UK affluents have more in common with their US counterparts than with their European ones, so the insights are still useful. Finally, most of the research is centred on the financial services industry – although if we use financial services as a proxy for considered luxury purchases, then the findings can still be revealing.

When it comes to usage, the study confirms that US ‘mass affluents’ are highly engaged in social media – 90% had used some form of social media in the past 12 months, with 72% using Facebook, 50% using Linkedin and 27% using Twitter. This backs up research in the UK from Ofcom which finds higher sociodemographic groups more likely to be active social media users.

As you’d expect, the study’s audience was found to be highly likely to use social media for professional purposes. However, the research found that they weren’t just using social media for making business connections, but were highly engaged with companies as well – 44% had engaged with financial companies on social media, 31% had read content from those companies on social media, 30% had followed or liked those companies and 23% had reviewed those companies’ multimedia content.

Nearly 40% of the study’s respondents had turned to social media for financial education or research, whether that be learning about financial trends, companies or products (i.e. discovery), or seeking advice or further information to evaluate what they’d learnt (i.e. consideration).   Nearly 2 in 3 of those who had used social media for both purposes had taken action – whether that be opening or closing an account, or purchasing a new product.

In terms of their expectations of financial institutions on social media, 3 key requirements emerged – social media as an enabler for enhanced customer service, as a means of providing timely updates such as market commentary and product performance, and as means of providing relevant content such as new information on products and services. In terms of the most appropriate social media channel to deliver this information, Linkedin was found to be the most trusted social source for financial information.

For us, there a 2 take outs from this research. Firstly, social media has primarily been seen as being most influential in lower involvement, less complex purchases.  This research suggests that, if approached in the right way, it can be play a role in more complex and considered purchases if used in the right way. Here the emphasis is not on discounts or on entertainment, but on creating high quality and relevant content to take consumers through the purchase funnel from discovery to consideration, delivering excellent customer service and providing relevant information post purchase.

Secondly, where the purchase is linked to the professional life of the purchasers – and we’re thinking not just financial products here but tech products such as mobile phones, laptops and tablets, business travel and even business fashion and accessories – then Linkedin clearly has potential due to its professional credibility. And it’s a network that’s often neglected too.

Some luxury brands – particularly those which are more complex and involved purchases – have concluded that social media is not for them. More research is needed but this study, if not conclusive, at least suggests that a re-think is in order.

The full whitepaper ‘Influencing the Mass Affluent:  Building Relationships on Social Media’ can be read here.

By: Shifra Cook

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Twitter has been busy in 2013.

First, back in January, they acquired and launched Vine – a ’micro’ format video creation, sharing and discovery service integrated with Twitter and other social networks like Facebook.  Brands have leapt enthusiastically on the bandwagon – over 30,000 have taken up the creative challenge of Vine’s 6 second format.  Consumers have loved it too, with new genres being created such as the video postcard sent from abroad.

Last week, Twitter launched another service – #music – an app designed to help users to discover emerging and popular artists using the activity of Twitter users as a guide.

How does it work?  In the words of Stephen Phillips, the founder of We are Hunted (the social music discovery service purchased by Twitter recently), “If you’re interested in the songs that have been tweeted by the artists and people you follow on Twitter, you can navigate to #NowPlaying to view and listen to those songs.  Or if you want to listen to music from the artists Wiz Khalifa follows, you can search for his name using the search icon in the top right corner. Then tap one of the artists you’re interested in.”

#music is integrated with iTunes, Spotify and Rdio, so users can play previews of tracks and purchase them via iTunes, and they can integrate their Spotify or Rdio accounts to share their own music and play the full version of tracks they discover using the app.

A music discovery app makes perfect sense for Twitter – music is the subject of so many conversations on the network, music celebrities are the most followed (8/10 of the most popular on Twitter) and #nowplaying is amongst the most popular hashtags. But where’s the payback in terms of advertising revenues for all that investment?  Twitter won’t be able to serve any advertising between tracks because previewing and streaming is happening via 3rd party partners (i.e. iTunes, Spotify and Rdio).   There’s an interest for brands beyond the music industry in what their followers are listening to – either to start social conversations, to source ‘band’ ambassadors or to inform other aspects of their creative strategy, but we’re not sure this information, or deeper insight, could ever form the basis of a premium service that brands would be prepared to pay for. 

Perhaps they will try to build an ad-product into the app – Vevo, myspace, and Spotify all have healthy display ad products – and they;ll no doubt be thinking about testing it. But we believe their long term aim is much more interesting.

That aim becomes clearer when looked at in the context of a third initiative launched earlier this month - targeting promoted tweets by keyword.

You can already focus your advertising activity on Twitter based on a user’s location, mobile device and/or interests. Now you can also target on what they’re tweeting. And you can combine that targeting with the other filters already available (location etc) to make your activity super targeted.

Many commentators are getting very excited about this new product, labelling it as true ‘intent’ marketing.  They argue that Twitter could even steal a march on Google as Twitter users may reveal an intent that advertisers can capitalise on before that user gets to the search stage. Some advertisers have already trialed the product and the results seem to be encouraging – camera brand GoPro saw close to 2 million impressions and engagement rates reaching 11% on tweets promoted with the new feature – much higher than Twitter’s standard engagement rates which are an impressive 1-3%. It’s all part of the long march towards truly personalised marketing, surely?

It’s certainly exciting but we’d add some provisos.  Can a keyword or phrase, taken out of context, really be used to predict intent?  In Google or Bing they can because we know people are searching for something – but if we’re eavesdropping on only part of the conversation, are we going to intervene in an intelligent way?  And how will Twitter users react to a service which can serve ads based on their conversations?  Perhaps they’ll take it in their stride because Twitter is a public forum. Perhaps they’ll even begin to ’shout out’ for relevant promoted tweets, using Twitter as some form of search engine.  Or perhaps they’ll find it intrusive? Advertisers will need to carefully consider these points with their agencies before committing.

And the rationale behind #music and Vine?  Well, both initiatives share the aim to make people use the service more often and for longer.  The longer they’re using it, and the more information they share, the more ads Twitter can serve to them and more targeted those ads can be. Someone sharing Vine postcards often is a frequent traveller – a great target for airlines, hotels and travel companies.

Specifically with Vine, we not only have a vehicle for easy creation and sharing of video content for consumers, but also a vehicle for creating cheap and relevant ads for brands. Segmented social, micro TV advertising, delivered on the fly, so to speak.

So we’re sure we’ll see Twitter innovating further before the year is out to further their aim of making Twitter the first social network logged onto each morning. And we expect Twitter’s advertising revenues to continue to grow too (they’re predicted to double this year) as advertisers pay increasing attention to possibilities that Twitter’s full range of advertising products present.

How far they grow is the question for Twitter, though.  They have a huge challenge in how to introduce more and more promoted tweets or ad messages without upsetting users. Twitter’s simplicity is a double edged sword - it’s clearly a huge selling point but if enough consumers were upset with increasing ad presence the next ‘Twitter’ (whatever that looks like) may not be far behind.

By: Neil Cunningham

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