March 28, 2019 (2078 words)
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And what it says about our economic system.
Tags: advertising, startups, personal
This post is day 87 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.
During the heyday of my startup, after we started working with Instagram data, we discovered the fascinating world of Instagram influencer marketing. If you’ve spent any amount of time on Instagram or any other visual-first social media platform, you probably know immediately what this means. If you haven’t, here’s the gist: people, mostly young women, will be paid to promote products on their personal Instagram accounts. There are different categories of influencers depending on how big their audience is (mega, macro, micro, nano) and what sort of products/lifestyle they promote (fashion, fitness, travel, gaming, food, etc).
Sometimes these “influencers” are famous outside the platform, having achieved celebrity through modeling or acting or something similar; sometimes they’ve inexplicably risen to fame on the platform itself. Either way, it’s a good deal for the brand, because influencer marketing on Instagram tends to feel more authentic than the old-fashioned ways of getting a washed-up reality TV star to appear in TV commercials, or juxtaposing bottles of Vitamin Water with Jennifer Aniston’s face to make the world’s most meaningless billboard. Younger people (the real digital natives) are especially susceptible to influencer marketing on platforms like Instagram and YouTube, partly because they’re more used to that platform, and because the way the platform is typically used helps to build up trust. When you get a sneak peek into someone’s daily life through their Insta stories or posts, you’re not going to develop the same defenses that you would with used car salesmen or telemarketers or whatever. Even if you know that the pretty girl with 10,000 followers is getting paid to say that she loves her new Alo Yoga pants (now 15% with her discount code!), it still feels more genuine than more traditional ads.
No one quite knows exactly how big the industry is, because it’s fragmented and a lot of it goes under the radar, and anyway the definition of “influencer marketing” is blurry. It can be quite lucrative, though. As a result, a huge number of companies formed to try and capitalise on this emerging ecosystem, by connecting brands with potential influencers. Lots of them were tech companies, of course, because it’s useful to build in-house tech to interact with Instagram’s API, and anyway tech founders tend to have a hubristic confidence that they can pull off anything. I bet a lot of these influencer marketing tech startups wrote in their pitch decks that they would eventually be the layer underpinning all influencer-related campaigns, or maybe even capture all of a brand’s advertising spend.
But remember, this ecosystem only existed because of Instagram. More specifically, it only existed because of Instagram’s failures. All these influencer startups were using really dumb and wasteful hacks to be able to do what they did, when Instagram could have so easily built out the same tech and integrated it within the platform. They could have just rolled influencer marketing into Instagram’s ad product, which would make life easier for brands and influencers, while also putting to rest the hopes and dreams of all these (pointless) influencer startups.
Why didn’t they? Well, see, there’s a tension. If Instagram has an official influencer program, it might dampen the organicity of this type of marketing. On the other hand, if they don’t, then influencer marketing remains an unregulated practice that occurs behind the scenes with no transparency, which could also lead to all sorts of bad things (people losing trust in influencers, etc).
In the last few years, Instagram (with the help of federal regulators) has been been testing that tension, with the effect of taming the previously Wild West-like influencer landscape. The FTC says you now have to indicate when you’re paid to make a post - one common strategy I’ve seen is to use the #ad hashtag (usually buried deep among dozens of other hashtags). And the platform itself has being creating various tools to make influencer marketing easier for brands, effectively cutting out the aforementioned startup middlemen.
All of this is to be expected, really. Instagram’s been making moves in this direction for several years now, in line with their complete lack of incentive to allow this extra-platform startup ecosystem to flourish. Why let startups or agencies take all these sweet marketing dollars?
This is probably cliché by now, but: Instagram’s users are not the customer. Brands are the customer. It doesn’t really matter if they advertise by paying random fashion micro-bloggers, or by spending that money on actual Instagram ads, or even just posting edgy photos of models wearing the clothes they’re trying to sell - obviously Instagram wants brands to spend money on ads that will make Instagram (Facebook) more money, but at the end of the day, it wants to keep them invested in the platform. Hence why Instagram recently announced it would enable users to shop directly through the platform, by interacting with shopping-enabled posts by specific brands.
To sum up what’s been happening here: Instagram created a product that took off despite being very unresponsive to user requests (remember when you couldn’t zoom in? and you still can’t click links in post captions!). As a result, an entire ecosystem of startups evolved to fill in the gaps, by allowing brands to connect directly with influencers, and to help influencers make money from the products they feature even if they aren’t partnering with the brand directly. But now Instagram is like, oh shit, we should get a piece of that, and they’ve been slowly killing off all these companies by 1) limiting their API access (that almost killed my startup) and 2) building their own alternatives in-house, which they can nudge brands into using and which will probably be better anyway.
Basically, all these outside companies were existing at Facebook’s mercy. They were probably counting on Facebook not caring enough about their existence for long enough that they could sell, or pivot, or develop a closer relationship with Facebook, I don’t know. I can’t remember what we were thinking, getting into this space. In hindsight, it seems so obvious that Facebook would eventually just crush everyone.
To be clear: I am not saying that Facebook is wrong to do this. This is not a case of good vs bad, where the good scrappy startups were unfairly hurt by big bad Facebook. There are no good guys in this story. It’s all bad.
I really hate ads, but nowhere do I hate ads more than on Facebook properties. Their targeting just works so well, at least on me. Way better than Twitter, for example - I just got a promoted tweet for a Lunch Combo featuring pizza and Pepsi at Little Caesars, which costs either $5 or $4 depending on whether you believe the graphic or the text; I have never been to this establishment and find nothing about it appealing in any way. Facebook, though, knows exactly the sort of commodities and services I have purchased in the past, or that I look at pictures of on Instagram, and so they’re able to cleverly recommend me more in the same vein, leaving my stupid lizard brain no choice but to click.
Now, I could get an ad-blocker again, but I got rid of mine a while ago out of a (perhaps misguided) desire to experience the web the way most people experience it, coupled with a tinge of masochism. Plus, I’m pretty skeptical of ad-blockers now that I know how shady some of them are, purely due to understandable financial pressures. (Capitalism has created both ads and the tools to block them, and if you’re not paying for the latter …) In any case, they tend to be iffy on mobile.
So I see lots of ads, and they’re ads that have been algorithmically coordinated to appeal to me particularly, to make me want to buy stuff. But I don’t want to buy stuff. I especially don’t want to buy stuff that I didn’t even know I wanted until I saw an ad for it. I don’t think I need all the stuff I buy, and yet I still buy it, because people along various points of the advertising industry are being paid lots of money to convince me that I do.
The worst is knowing that it’s not just me - it’s the system. The world, as a whole, does not need all the stuff that’s being produced, and nature in particular does not need this, but as a consumer, I am powerless to change the inner workings of a system that tries desperately to make us buy more using intelligently-designed technology. Even if I personally figured out how to immunise myself from these ads, my individual acts of resistance would not make much difference, because the system would still be in place. You might as well try to drink up the ocean. I could disappear off the face of the earth right now, never to make an unwanted impulse buy ever again, and the whole system would still keep going, with the only difference being a staistically-insignificant decrease in impression/click-through numbers.
I hate it. I hate all of it. I especially hate how difficult it would be for us to ever exit this system, because of the path dependencies in place.
Contra Lenin, I submit that advertising technology is the highest stage of capitalism, not imperialism. Start with commodity production. Once that’s figured out (once the infrastructure and techniques are basically set), the value moves up the stack, so that the massive profits are in the marketing layer, rather than manufacturing. Those who figure out how to get people to buy the commodities get to commandeer a lofty position at the top of these global chains of commodity production, taking a nice hefty cut of the surplus value extracted from labourers down the chain. (There’s a historical dimension to this global division of labour, of course - it tends to trace the shadow of historical imperialism, or could even be seen as a new kind of imperialism.)
Facebook and Google are really good at this; they get the biggest profit margins in these value chains. The more traditional ad agencies are doing well, too - slightly lower down the chain, but still extracting so much wealth compared to the people who actually make the Nikes or whatever that are being advertised and sold. (For example, the former CEO of the world’s largest ad agency conglomerate has made over £100m in compensation over the last few years.)
The problem is that we have a social system dominated by corporations, who are themselves ruled by the profit motive. Their whole raison d’être is supposed to be increasing profits. And if they’re selling a good or service where the market isn’t fully saturated yet, the usual strategy is to pump money into advertising to increase demand. At the same time, all the companies in the advertising industry are also ruled by the profit motive, and so they’re incentivised to get brands to sell more stuff. The result is a really dumb system where companies keep producing and selling shit we do not need, and you have a growing swathe of the population that seems to think “getting people to buy stuff” is a reasonable career option.
Proponents of the system seem to think that all this frothy wasteful production is fine, because it’s just a side effect of having the greatest economic system on earth, one that gives us all these freedom-enhancing choices. I mean, sure, I can buy a wide variety of similar clothing from various different brands at wildly different prices. Is that supposed to be a good thing? Is that supposed to make up for all the horrific ecological downsides of overproduction of goods?
To sum up: consumer choice is a bad paradigm for an economic system. If it was ever useful before, it certainly isn’t now that we have so much consumer choice that a whole dumb industry - influencer marketing - has sprung up to solve that problem. Consumption should be a means to an end, not the end itself. Getting to that point would require such massive reconfiguration of our economic system that it would probably be unrecognisable, and certainly not something we would call “capitalism”.
What I’m really saying is, if you hate Instagram influencers, then you should also hate the economic system that gave rise to them. Don’t hate influencers, hate capitalism.