An abundance of cheap information makes attention costly – a fact Facebook seems to be banking on to make the most out of its choicest investment, the billion dollar baby, Instagram. An algorithm that deems which content is important to users will soon dawn the platform making its chronological content arrangement passé.
The socialverse has been moaning what maybe called the eventual death of organic reach on Instagram. But, that’s not it. An algorithm could mean a lot more, changing not only content consumption patterns but re-evaluating Instagram’s stance in the new age social media battle that boasts of warriors such as Snapchat and Periscope.
To understand the effects of this big step, Social Samosa takes a look at probable causes behind the algorithm that can gradually determine the future of Kevin Systrom and Mike Krieger’s brainchild.
It’s always about the money
According to eMarketer’s first ever Instagram forecast, the photo sharing app was pegged to bring in $595 million in mobile ad revenues worldwide in 2015. The numbers were backed on the high demand for Instagram’s newly launched ad offerings.
A report by Fortune further revealed that Instagram reportedly managed to contribute $730 million (these numbers were revealed by Credit Suisse analyst Stephen Ju and his team) in revenue for the fourth quarter of 2015, a phenomenal surge for a platform that recorded zero revenue up until a year ago. Not to forget, these numbers surpass the estimates given by eMarketer.
The glitch however is that, just $30 million of the total ad revenues are slated to generate outside the USA; this comes to 5.0% of the total, a worrisome number, especially when the social app has to compete fiercely with peer to peer platforms such as Snapchat and Periscope.
An algorithm allows Instagram to introduce sophisticated advertising options which eventually cater to marketers at varied costs and formats. For instance, Instagram could make a bong with tailored ad packages for start-ups in India.
Dealing with Frankenstein’s Monster
Ever since its acquisition by Facebook, Instagram took pride in its active and rapidly growing user base. In India itself, Instagram users doubled in one year (as of September 2015). This however, soon started creating a negative impact.
Numbers by Locowise suggest that frequency of posts from the accounts it studied rose from 0.89 at the beginning of 2015 to 1.04 at year-end. On the contrary, an average user started following 400 to 500 accounts, a steep rise from 250 in early 2015. Active users equalled to a sea of content eventually leading to users missing out on almost 70 per cent of it.
This further resulted in a Southward crawl of crucial statistics. Locowise data depicted a decrease in overall follower growth on Instagram, reaching to 92.86 per cent. Simultaneously, the engagement rate for Instagram posts was 0.84 percent of the total audience in February, down 11.58 percent from the previous month and also setting a low mark since April 2015.
Instagram’s algorithm will be a strong counter strategy for dealing with the impact of surging users and content yet declining engagement and UI that is especially impacting content created by brands.
Rise and rise of Snapchat
At the risk of throwing some more data your way – Business Insider suggests that Snapchat has 100 million daily active users that spend an average of 25 to 30 minutes per day on the app. 60 per cent of the total users create fresh content as opposed to just consuming other’s stories or checking out the Discover feature.
While Snapchat user base stands petite when compared to Instagram, the app has been growing rapidly posing fierce competition to Instagram and Facebook, to the extent that Snapchat’s video traffic is catching up with Facebook.
To take on the not so new kid in the town, Instagram has no option but to stay a step ahead. Speculations have it that Snapchat is discussing the possibility of an algorithm based Stories tab, which will pose a serious threat to Facebook and Instagram advertising.
As a 20 something, I feel it’s safe to say that Snapchat is evolving into the first option for millennial who now caption an image on the app and then Instagram or DP it. An algorithm ranked timeline is Instagram’s best shot of competing with Snapchat at least on the marketing front.
Do you need to be worried?
Finally, arriving on the effects bit of this cause-effect situation. Once burnt, twice shy. After Facebook buried organic reach, it’s only natural for brands and users to fear a similar fate for Instagram. But, before you throw your hands up in dispair and begin turning on notifications for all your favourite accounts (which might not be a good idea by the way) take a look at the possible results.
To begin with, Indian marketers who are already big on paid Instagram advertising will have brighter opportunities. With questionable organic reach, Instagram is likely to roll out tailored ad packages.
This however, will happen eventually. “The immediate impact is going to be a dip in engagement for most brands,” says Peter Claridge, Manager, Global Marketing, Unmetric. In a bid to view their favourite accounts’ content, users might let go additional accounts or vice-versa.
Claridge tells Social Samosa that brands will now need to have a more data driven approach. “Brands need to evaluate why they are using Instagram in the first place,” Claridge concludes.
Other possible effects could be demand of Instagram influencers, decreased importance of follower count, added weight on engaging content, requirement of much, much sharper CTAs.
“Brands looking to rise through the algorithm will need to be selective and single-minded about the content they post, paying greater attention to earning their audience’s attention via quality and relevance,” opines Zafar Rais, CEO, MindShift Interactive.
Integrated new tools and content forms such as Boomerang, GIFs, and videos, will help brands leverage Instagram in the most effective way. “Brands will be forced to move away from linear storytelling,” Rais further adds.
In conclusion, yes, it might be time to write an obituary for Instagram’s organic reach. Taking a U-Turn from the chronological order is Instagram’s best bet to maintain its stance in this tooth and nail competition. On the brighter side, users will (hopefully) get more of what they like and advertisers will remain un-impacted as the frequency and order remains the same.
In my view travel brands, especially start-ups such as HolidayIQ, Skyscanner, TripHobo and likes that are active on Instagram but don’t bank much on paid advertising will be the most affected, as this beat of content received the most organic reach and open rate.
For now, let’s keep a close tab and brace ourselves to enter the trial and error phase of Instagram all over again.