What Marketers Need to Know About the Instagram Algorithm

By

In the world of social media, everything is coming up algorithm. First Twitter announced the introduction of a “catch-up” feed. Now Instagram is jumping aboard the algorithm train. Here’s what the changes mean for marketers.

We all knew A-Day was coming for Instagram. The network’s popularity, combined with its famously algorithm-obsessed parentage (ahem, Facebook), the Instagram algorithm introduction was inevitable. After all, Facebook was far ahead of the algorithm curve; it switched to an algorithmic feed way back in 2009.

Plus, brand engagement has been through the roof on Instagram. According to our research, brands on Instagram see a drastically higher engagement ratio (interactions per post per 1,000 followers) than on Facebook, Twitter, LinkedIn, or Pinterest. In fact, Instagram’s brand engagement ratio is eight times greater on average. Engagement like that is too good to last (for free, at least.)

So what does the Instagram algorithm mean for marketers? In short, it means the free lunch on Instagram is over. There’s simply too much competition to cut through the noise. As Instagram has grown up, its engagement levels have started coming back down to earth; the average engagement ratio with brand-generated Instagram videos and pictures dropped 31 percent and 36 percent, respectively, across 2015.

Instagram’s co-founder and chief executive explained it this way in an interview:

“On average, people miss about 70 percent of the posts in their Instagram feed. What this is about is making sure that the 30 percent you see is the best 30 percent possible.”
— Kevin Systrom, co-founder and chief executive of Instagram

For marketers, that’s the bar to beat: Is your content better than 70 percent of your audience’s feed? (That’s no easy task: Keep in mind you are likely competing with kittens, babies, Taylor Swift, or some combination of the former.)

Who wins under the reign of the Instagram algorithm?

The short answer: Marketers creating quality content will rise to the top. Consider the playing field leveled for “shotgun Instagramers” posting dozens of photos a day. A brand crafting a few high-quality posts can now outperform a serial low-quality poster.

The switch to an algorithmic feed also benefits both Instagram users and Instagram itself. Both of these repercussions are important to marketers, too.

For users, the big win is greater relevancy. Even though some Twitter power-users cursed the “catch-up” feed, Twitter’s former product manager explained its benefits succinctly:

An algorithm is by definition a “procedure for solving a mathematical problem.” In the world of social networks, that mathematical problem is simple: there’s too much content and not enough time to see it all. Instagram sports 400 million monthly active users and 80 million new photo uploads a day.

For the social networks themselves, providing a richer, more relevant user experience should foster greater user adoption and in-platform interaction. And that means more leverage. Now Instagram can essentially charge brands a cover to get in on the photo-sharing party. Cue the sound of money falling (in the form of ad revenue).

In many ways, algorithms are the Grim Reaper of organic reach. But marketers, don’t panic: The news isn’t quite as grim as the Grim Reaper metaphor implies.

The introduction of algorithms thrusts  marketers into a symbiotic power dynamic with the social networks we’ve come to rely upon to distribute our content. We call it the Pendulum Swing of Social:

Let’s break this down.

As social networks grow up, they face the typical challenges of entrée into adulthood: self- definition and self-sufficiency. To become self-sufficient, networks implement new ways to monetize audience access while preserving content quality and relevance. So they put a paywall between between brands and audiences. [Enter the algorithm.]

With a paywall in place, we marketers must now fork over dollars in order to reach the audience we invested blood, sweat, and tears (read: time and resources) to build in the first place. With the sunk cost fallacy rattling in our heads, we dole out our ad budget and start wrestling with measuring our ROI.

But here’s where the symbiosis sets in.

It’s now on us as marketers to create content worth promoting. We probably won’t (or shouldn’t) throw money behind that tweet the intern Dave thought up at the lunch table. We want our most important messages to reach the right audiences, so we pay to target our content accordingly.

As much as we bemoan the loss of organic reach, when we pay to play the scales actually tip to our advantage. Because by forcing us to pay to play, the social networks are on the hook to stay relevant and deliver value. Remember, it’s all about checks and balances: if we’re forced to pay to get our content seen, it better be worth our while. If Instagram, or Twitter, or any other social networks change so much that they alienate their user bases, that network will quickly become a marketing ghost town. Brands won’t throw ad dollars at a network that isn’t interesting anymore.

As the Instagram algorithm rolls out (which it will do in “single-digit” percentages), watch these metrics: ad revenue (especially mobile ad revenue) and monthly active users (MAUs). Algorithms and soaring ad revenue may well be the Grim Reaper of organic reach, but healthy growth in MAUs signals a network’s relevance.

Your marketing analytics advantage. Go from big data to big ideas. Fill out the form to learn how we can serve as your reporting and insights team.