ARIELLE CHARNAS: HIGH CONVERSION RATE CASE STUDY

• Charnas has 1.1 million followers on Instagram. She is included as an example of an influencer with a higher conversion rate. She has an estimated 2.8% engagement rate, which is fairly high. The calculation is provided in the strategy section.

• Charnas started her Instagram career early (in 2010) before the platform was saturated with influencers.
• According to Michelle Merino, a consultant specializing in influencers: Nordstrom forged a deal with Charnas and indicated that this type of deal is far more complex and comes with strings attached "exclusivity terms, equity or rev share compensation models," which suggests that money is generated by going beyond just pay per engagement or post.
• Charnas leverages the visibility of Instagram, allowing physical products to be associated with her daily life.

• Charnas earns an estimated $17.06 per follower. The calculation is provided in the strategy section.
• As a point of interest, her earnings come from complex arrangements that may involved elements such as equity and revenue shares.
• As a useful indicator of her level of success, Charnas earned more than $4 million in sales one day.

KAYLA ITSINES: LOW CONVERSION RATE CASE STUDY

• Itsines developed a successful reputation as a gym instructor, and subsequently relied on word of mouth to grow her base.
• She then started an Instagram and Facebook marketing campaign in 2012, which provided training and nutrition advice.
• Itsines generates revenue from sources beyond mere 'pay per post' or 'engagement'. These include "...paid ebooks, a stadium tour, hardcover bestsellers, and a hugely popular app".

• Itsines is estimated to earn $17.42 per follower. The calculation is provided in the strategy section.
• As an additional insight, Itsines earned an estimated $17 million from her training app in 2016.

GENERAL ADVICE

• Influencers or micro influencers have discovered that brand partnerships can be unreliable sources of income, and as a result may rely on platforms - such as Patreon - to sell subscriptions, digital goods and merchandise.

• According to Brittany Henessy, the average payment per Instagram post is $500 to $30,000.

• Conversion rates differ widely, depending on the type of action, industry and landing page - but an average of around 3.1% is indicated for Instagram.
• According to Hootsuite, engagement rates are one of the best predictors of conversion rates.

• As a rough guideline, the following interpretation of engagement rates is provided below. However, it should be noted that engagement rates tend to diminish with larger followings:

• Less than 1% = low
• Between 1% and 3.5% = average/good
• Between 3.5% and 6% = high
• Above 6% = very high

RESEARCH STRATEGY

Gymshark

• Gymshark, a small business founded by Ben Francis in 2012, has steadily grown to become one of the fastest-growing fitness apparel companies with customers in 131 countries.
• In 2016, it was named the fastest-growing retailer in the United Kingdom (UK).
• Various marketing strategies have contributed to Gymshark's success in generating £100 million (roughly $121 million) in sales in 2018 including use of influencers as brand ambassadors, connecting with customers both online and offline, involving customers in Stories, and employing strategic sales tactics.

Influencers as Brand Ambassadors

• Gymshark first turned to Instagram influencers to expand its brand by contacting well-known fitness influencers, such as high-profile bodybuilders Nikki Blacketter and Steve Cook, and sending them free apparel in hopes that they would wear and promote the brand's products on their social media channels.
• This strategy was successful, as brand ambassador promotion of products was correlated with a sizable effect on sales, and the brand went on to sponsor 18 influencers with a collective Instagram following of over 20 million users.

Offline Events

• Additionally, Gymshark fosters a sense of community among its followers by connecting online strategies with offline marketing campaigns including expos and "meet-and-greets."
• An expo "world tour" organized by the brand received a great deal of attention due to its widespread documentation on social media channels (including Instagram); however, due to the sheer size of followers who showed up, the event management was hectic and resulted in long lines.
• Instead, Gymshark adapted its offline strategy to orient towards use of pop-up stores which are more contained in size by use of tickets and only select athlete appearances, adding an incentive to existing customers by adding an exclusive element to events.

User Content

• Another tactic used by Gymshark on Instagram is generating content for its users and promoting content made by its users.
• This tactic further fosters the sense of community among Gymshark's customers, by promoting videos and posters posted by users on its Stories using workout videos created by Gymshark athletes or wearing Gymshark apparel.

Strategic Sales Tactics

• During Black Friday and Cyber Monday in 2017, Gymshark turned to Instagram for its marketing strategy during these crucial retail dates: creating a "BLACK OUT" campaign, complete with models wearing the latest items and user-generated content, which ran for two weeks.
• Using a combination of Instagram ad products (e.g., ad Stories, dynamic ads) and complementary content, Gymshark reached 16.4 million users and 40% of sales during the time of the campaign were gathered from Instagram.
• Gymshark also achieved a 6.6x return on ad spend during this campaign.
• However, the site also experienced a shutdown for eight hours during 2017 Black Friday sales due to the sheer volume of customers.
• Despite the shutdown, Gymshark rectified the issue by offering discounts to those who complained of the site crash.

Asos PLC.

Instagram Stories Advertisements

• Asos was one of the first brands to employ use of Instagram Stories to generate ads in 2016.
• Asos's willingness to experiment with new formats and featured through Instagram have been historically successful, as the first ad campaign through Instagram Stories reached 3 million followers, generated a 14 point lift in ad recall, and 3 point uplift in brand awareness.
• Since then, Asos has praised use of Stories in increasing brand visibility and profitability.
• The brand has grown a following of 16.5 million followers on Instagram, up 17% from 2017.
• In fact, profit jumped by 10% to £29.9m (roughly $36.3 million) in half-year profits in 2018 as compared to the same period in 2017.
• Nick Beighton, Chief Executive Officer at Asos, has praised the Instagram-effect as being the driver for the company's drive in profit, noting that popularity among 20-somethings on the platform has surpassed that of Facebook.
• Content on Instagram for Asos was viewed 30 million times in 2018 while videos on Instagram Stories were viewed 52 million times, up by 40 million since 2017.
• In light of Instagram's newest shopping-enabled advertising feature in 2018, Asos is experimenting with digital efficiencies and has since reduced ad spend from 5.3% to 5.0%.
• However, in the United States, the pay-per-click (PPC) cost has risen dramatically, posing a challenge to Asos' digital advertising strategy in the North American market.

Shopping-Enabled Advertisements

• Beighton noted that the shoppable feature on Instagram could be potentially risky and that Asos would rather keep consumers on the website though he is willing to experiment with the feature over the course of 2018.
• In reality, only 2.6% of the 63.2 million Asos.com's United States visitors buy products from the site and 89% of visitors do not engage.
• Despite traditionally low conversion rates on Instagram, companies such as Asos have employed additional shopping strategies to successfully improve conversion rates.
• Asos adds item IDs to product images posted on its Instagram account to incentivize sales among its followers, who primarily use social media to socialize, to avoid low conversions.
• Overall, Asos has been successfully growing through its use of digital advertising through Instagram: site visits increased by 25% year-on-year, average order frequency improved by 8%, average basket value increased by 2% and there was a 10 base point improvement in conversion.

Analysis of the CTR on Instagram

2018 CTR Analysis

• After a drop in Q4 2017, the click-through rate (CTR) on Instagram rose back to previous levels in Q1 2018, showing a 41% boost in YoY performance.
• In Q1 2018, Instagram reported a big increase in engagement especially among younger audiences.
• In the Q1 2018, the CTR on Instagram was 0.52%.
• A study by Pew research shows a 35% jump in social media usage on Instagram compared to 28% who reported using it two years ago.
• The study further shows that 71% of 18-to 24-year-olds and 54% of 25- to 29-year-olds are on Instagram.
• In Q2, the CTR on Instagram rose to 0.62%.
• In Q3 2018, the median CTR for ads on Instagram decreased in comparison to other platforms.
• However, the number skyrocketed from where it was the previous year, maintaining the upward trajectory it had picked two years back.
• In Q3 2018, CTR for ads on Instagram was 0.67%.
• The improvement in CTR in Q3 was mainly driven by an increase in advertising spend by up to 177% from the previous year.
• Instagram’s commitment to building out its advertising platform, paired with the announcement that the platform had reached one billion users, attracted more brands and marketers to the app.
• In Q4 2018, budgets allocated to Stories increased by 124% year-over-year and 94% quarter-over-quarter.
• CTR, cost per thousand (CPM), and cost per click (CPC) rates for Stories also increased rapidly in Q4 2018 as compared to Q4 2017, with CTRs jumping by 52%, CPM rising to 112%, and CPCs growing by 39%.

2019 CTR Analysis

• In Q1 2019, Median CTR for ads on Instagram was 0.55%, representing a 0.07% drop from the previous quarter.
• It was close to where it landed the same time last year (0.52%).
• Despite the drop, in Q1 2019 marketers reported pleasing results from Instagram Stories and many started reallocating budgets to boost success.