Brands seek instant success

07 April 2019 - 00:00 By CAMILLA HODGSON

A woman's manicured hand clutches a glass filled with a clear liquid poured over ice, her first and middle fingers each adorned by sparkling gold rings. "Two-finger ring stacks are in. Millennial pink is basic. Ugly shoes are money. Juice cleansing is dead. U follow?" reads the caption.
It is just one of Dirty Lemon's more than 3,000 posts on Instagram, the social media platform that has been crucial to the direct-to-consumer beverage brand's growth.
"I have an order issue," wrote a customer in the comments. "Checking now x," responded Dirty Lemon, whose products include a "collagen beauty elixir" and "charcoal daily detox".
Dirty Lemon is just one of dozens of start-ups that have leveraged Instagram's 1-billion users to build their businesses. Larger examples include beauty brand Glossier and mattress company Casper, both of which became "unicorns" last month, after raising $100m (R1.4bn) each.
The photo-sharing app has become a nexus of branded marketing, millennials browsing the latest fads and a large number of "influencers" peddling products.
Last month, in an effort to harness these new networks, the Facebook-owned platform said it was launching a shopping feature that will allow users to buy products directly from the app.
Creating an Instagram page that displays a gallery of products remains free. But paid-for advertising on the platform has become big business since it launched in 2017: eMarketer forecasts that Instagram will make up 6% of global mobile ad spending this year, and a fifth of Facebook's ad revenue.
"Brands have gone all-in on Instagram," said Alexa Tonner, co-founder of social media marketing agency Collectively, pointing to the beauty, wellness and fashion sectors in particular. Instagram's simple, visual layout - a rolling feed of images as well as individual user galleries - makes it well suited to advertising, she added.
The opportunity for unmediated communication between brands and users has also allowed early-stage direct-to-consumer businesses, such as personal grooming brand Dollar Shave Club, to develop personal relationships with customers.
Dollar Shave Club, which grew its following by posting tongue-in-cheek photos of bearded men posing in steamy bathrooms, raised $165m from venture capital firms over four years. In 2016, it was bought by consumer goods company Unilever for $1bn.
Dirty Lemon founder Zak Normandin said Instagram was "critical" to his firm's early growth. In 2015, the health-drinks company launched using only an SMS-based ordering service and Instagram account to build an audience. Normandin said the company grew its following "quickly and organically" using free and "relatable" posts.
In 2017, the company became one of the first to pay for advertising on Instagram. It does not disclose revenue or profit figures, but Dirty Lemon said sales had doubled every year since 2015 and were expected to increase by 250% in 2019.
Meanwhile, Casper's chief marketing officer, Jeff Brooks, said Instagram had been "integral" to building awareness of the mattress company, and for cultivating "a community where we can connect and engage with our customers".
Debra Williamson, an analyst at eMarketer, said that for early-stage companies looking to develop a following, Instagram has helped provide a "level playing platform" because it shows users the posts and ads it thinks they will like most, rather than those from the biggest brands.
But Normandin argues that the rising cost of advertising on Instagram has reduced its "value as a marketing platform" for small businesses. The cost for Dirty Lemon to acquire a customer on the platform rose from about $30 in 2017 to more than $100 at the end of 2018, he said. Instagram declined to comment.
But as competition intensifies, some brands - including Dirty Lemon - have ceased to advertise on social media altogether.
Instagram has become "cluttered with brands pulling for customer attention", Normandin said. "If we were starting from zero right now, we wouldn't start on Facebook or Instagram."
© The Financial Times Limited 2019..

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