Could it be that just when everybody grasps social media’s profound consumer reach and influence, that reach and influence are waning?
Some marketers and branding experts think so. Though Instagram’s ad revenues in the United States are forecasted to hit $9 billion in 2019—up from $6.1 billion in 2018, according to eMarketer—companies young and old have grappled with lackluster returns on their social media investment in recent years.
Business of Fashion recently tackled the question in an article boldly entitled “The Golden Age of Instagram Marketing Is Over.“
In the article, writer Chavie Lieber reports that companies including Procter & Gamble and cosmetics chain Lush have “capped or pulled back on digital marketing.”
Renae Smith, founder of Sydney-based PR agency the Atticism advises her fashion clients not to spend on social media advertising. She told Business of Fashion, “If Instagram launched today, we would be laughing at a platform that expects us to spend so much just to get in front of audiences.” She added, “Social media has gone from a place that’s a fantastic way to connect to being a business that sucks all the money out of a brand’s wallet and is still ineffective.”
Strong words, to be sure. And certainly scores of startup companies have been successful in building and promoting their brands almost exclusively through social media advertising (see Bombas, Warby Parker, and Joybird furniture, to name just a few).
But has the field become too crowded and the competition too fierce? Is content fatigue prompting social users to mindlessly scroll more and not actually click? Are the realities of spending hours every day on a mobile phone (which can be emotionally and physically disruptive) becoming more well-known?
To be sure, consumers are more educated when it comes to sussing out real-deal content in a sea of native advertising—and that slow-but-steady education can impact clicks on social. The novelty of social media has, for many, worn off. They stay for the baby and wedding pictures—and maybe for the style and vacation tips, too. But for some, Facebook and Instagram have become more utility than Sunday-reading-on-the-deck pleasure.
Not helping matters is the increasing cost of social advertising, which rose 12% over the past two years, according to Adobe Digital Insights.
“Forty to 80% of the venture capital dollars raised by online brands is spent on Facebook and Google ads,” Michele Romanow, the founder of finance start-up Clearbanc, told Business of Fashion. “For brands that already have product-market fit and just need money to acquire new customers, this is a really bad deal.”
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