The Instagram conundrum: your data for a billion shoppers

Arpi: 'There are people who love to shop and there are people who need to shop'
Arpi: 'There are people who love to shop and there are people who need to shop'

Advertisers face a dilemma when going big on Instagram, but the social media brand's head of shopping insists its global reach is worth it.

Why would anyone buy something on Instagram without shopping around on other websites first?

This is the question rattling around Campaign's head as we sit down with Ethan Arpi, Instagram’s shopping product marketing lead, who is visiting London this week. 

It’s a criticism he has heard many times, Arpi admits, and his answer strikes at the heart of Instagram’s monetisation strategy. 

"There are people who love to shop and there are people who need to shop," he says. "We’re going to be playing in that space with people who love to shop, where it's the experience of actually finding something new – that surprise and delight of seeing something that you didn't know existed and knowing that you want to fit in there." 

Shopping has been a huge focus for the Facebook-owned picture-sharing platform since it launched in 2010. Five years after being acquired by Facebook, Instagram is further encouraged by the fact that 80% of its one billion monthly active users now follow a business on the platform.

To get a sense of how big business Instagram is, its share of Facebook’s total revenue is forecast to double within three years by the end of 2019. Instagram is also expected to be worth 70% of new Facebook revenue by the end of 2020.

Now, the picture-sharing platform has begun trialling Checkout, a beta feature that enables transactions to be made within the Instagram app, instead of relying on advertisers to service their own direct-to-consumer platform. Twenty-two brands, including Adidas and Burberry, are partnering the platform, which has limited the trial to mobile users in the US.

Not just impulse purchases

It’s no surprise that the participating brands are lifestyle and clothing advertisers – serendipity and influencer approval are important motivations for this emerging Insta-shopping activity.

However, Arpi is uncomfortable with defining Instagram shopping as "impulse behaviour". He knows definitions matter in the world of marketing, having joined Instagram three years ago from Ogilvy & Mather New York, where he was a strategist and helped launch products for IBM and cable channel Showtime.

"I would describe it more as like discovery. Shopping is like, you might be looking for a new book, or something like that, until you're looking for broad inspiration… we know most people actually don't come to Instagram to go shopping; a lot of people just come to Instagram." 

Rather, the way in which users are drawn towards purchases is the brand equity created on the platform through profile pages. Burberry, for example, posts "inspirational content", such as footage from runway shows. There is also a shopping tab on the Explore navigation, which allows brands to link clothing items to catalogues. 

The data dilemma

While discovery is an attractive reason to sell direct via Instagram, the clear downside for brands is that Facebook retains all the data that is held about consumers who use Instagram to shop from discovery to purchase. 

For brands that go all in on the platform, would this lack of their own data ultimately restrict their ability to grow further? 

"When your business and you set up shop on Instagram, all of a sudden you have access to a billion people. And one of the big challenges that businesses have always faced is finding new customers and getting scale before digital was even a thing," Arpi responds.

"I think we're unlocking much more value because, as a business, you can actually now access a billion people. You see a lot of businesses that have joined the export economy, because they're actually able to find customers overseas that they weren't ever going to be able to reach."

Nor is the data available to Instagram merely demographic in nature: analysing users’ shopping behaviour is up for grabs, too, as is using the platform to create a new avenue for customer service through direct messaging.

"There's much more conversational commerce, and people are asking [the businesses] questions and asking about availability," Arpi explains. "Some of the feedback we give to businesses is that if you're going to be looking for a feature that's responsive, you actually see much higher customer conversion if you respond to your customers."

Brands should be Instagram 'pioneers'

To this end, Instagram recommends that brands adopt "a set of practices" that are geared towards having a more "authentic" tone of voice.

"Whether it's in stores, whether it's a feed, in Stories – being much more authentic behind the scenes pulls people in and shows you how the product is actually made or how it fits on," Arpi says.

However, it is also up to brands to be "pioneers" and decide how best to market themselves on Instagram, he insists.

"We try not to be so explicit to say do this or do that, because it's really unique – there are 25 million businesses around the world," Arpi continues. "And what works in the UK may or may not work in a place like Indonesia, for example. And so what we say is: we have these tools, we recommend experimenting with those tools and seeing what's right for your brand."

Indeed, because Instagram sees itself as being "so early" on the ecommerce journey, Arpi will not be drawn on particulars such as what percentage Instagram is looking to take from payments made within the app.

He says simply: "We’re just focused on making sure this is a very brand-friendly platform and whether this is going to be a great tool for business to find its customers."

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