February 13, 2014
L2 Think Tank's latest social media report makes the case that Instagram is beginning to outstrip veteran platforms because of its proliferating and attractive user base, high engagement levels and ecommerce conducive format.
Visual commerce company Olapic collaborated on the report with insights, such as user-generated images presented on brand Web sites increase conversion by 5 to 7 percent and boost average order value by 2 percent. Luxury fashion brands such as Michael Kors, Burberry, Louis Vuitton and Marc Jacobs have emerged as dominant Instagram players, suggesting that Instagram is ideal for an "evolved form of window-shopping."
"The speed with which prestige brands have flocked to Instagram has been surprising," said Danielle Bailey, research lead at L2 Think Tank, New York. "As a visual medium, Instagram has been a natural fit.
"The extent to which both brands and consumers under-utilize videos is somewhat surprising," she said. "The high production value that is the standard for Instagram video remains a barrier."
Ninety-three percent of the 249 brands surveyed have an Instagram account, up from 63 percent last July.
Forty-three percent of brands post more than once per day and 72 percent are now producing Instagram videos.
Bergdorf Goodman Instagram post for #ArtMatters
Brands post about 15 images for every video and engagement for images is 1.5 times higher.
Although fashion brands and retailers ostensibly dominate the platform, beauty brands have the fastest growing communities.
Balmain Instagram post
Unlike other platforms that depend on a certain amount of text-based communication, Instagram's visual nature allows for easy transmission between cultures.
Sixty percent of its users live outside of the United States. Eastern European countries have the highest engagement levels, while Asia Pacific nations have the highest growth rates.
Also, Instagram has unimpeded access to the Chinese market, a rare and strange feat for a social media platform.
L2's Instagram 2014 video
Luxury brands have begun to leverage the reams of user-generated content on Instagram to boost ecommerce.
For instance, algorithms can pore over hashtags to track down relevant content.
Chanel currently generates the most hashtags, despite not having an official Instagram presence. Other top hashtagged brands include Prada, Michael Kors, Louis Vuitton and Gucci.
This content can then be vetted by the brand to find appropriate and compelling images.
Next, the images can be placed on a brand's Web site to provide organic examples of a product and streamline ecommerce.
The images with the highest engagement levels can be repurposed on social media and in targeted emails for even higher rates of engagement.
Fourteen percent of the brands studied leverage user-generated Instagram content on their Web sites.
Researchers at the University of Wisconsin looked at 130,000 Instagram images and found that engagement triggers differ from conversion triggers.
For instance, images with green spur engagement, while images with blue or yellow spur ecommerce.
The other image-centric social platform hints at Instagram's potential. Pinterest constitutes 25 percent of social commerce sales and generates order values that are 126 percent higher than Facebook's.
Michael Kors was granted a flash of genius accolade for its #MKTimeless and#MKTokyo campaigns and its effective Instagram advertising. The brand registered community growth of 56 percent in the last half of 2013, adding 561,858 followers.
#WatchHungerStop posts from Michael Kors followers
Lancôme's #BareSelfie campaign garnered 500 user image and the ensuing UGC gallery generated 50 percent of sales for the newly launched DreamTone serum.
Both brands share a propensity to leverage user-generated content, a trend that will become much more pronounced in the coming months.
"The appeal of Instagram to brands is less about content sharing and more about using it as a means of capturing user-generated content that can be reused across a brand's digital landscape, especially in influencing commerce," Ms. Bailey said.
"If Instagram hopes to continue its love affair with brands, it will need to continue to evolve, reducing ecommerce friction and providing analytics that will help brands identify and target influencers," she said.
Joe McCarthy, editorial assistant on Luxury Daily, New York