For now, the ads within Snapchat are designed for branding, not for direct response, according to Yory Wurmser, an analyst at eMarketer. However, another feature within the app, called Snapcash, lets users exchange money via Square. This payment capability could eventually be used as an extension of the advertisements that pop up in Snapchat stories.
"Right now it's just peer-to-peer but they could be setting up the infrastructure for direct payments," Wurmser says.
Instagram embraces links
Instagram, the popular photo-sharing app, recently launched new features for advertisers that are more robust than its existing static ads. A new button below advertiser photos, next to the "Like" button, lets you shop for related products, download apps or learn more. This is a significant development for advertisers, because you previously had to go to a brand's profile on Instagram to learn more or to shop for products. It's also important because user engagement is higher for top brands on Instagram than other social media sites, according to a Forrester Research report. Instagram posts produce a per-follower engagement rate of 4.21 percent, compared with .07 percent on Facebook and .03 percent on Twitter.
"Visual ads are always more effective than text," Wurmser says. "What these buttons do is make the advertising formats more powerful and easier to attribute to an actual sale."
However, the challenge for Instagram, as well as Snapchat, is to balance the needs to increase ad inventory and keep the user experience intact. Instagram will also have to find a way to position itself as an ecommerce destination, because until now the app has mostly been used for photo and video sharing, and messaging.
"The fundamental issue with Instagram is that they're seeing themselves as a shopping medium, but it's more of a communication medium for young people," says Mulpuru-Kodali. "Instagram was not built with commerce in mind, and a lot of brands are trying to insert themselves into that conversation."
Alternative ways for companies to sell products to Instagram users also exist. Services with affiliate links such as LikeToKnow.It and ShopStyle Collective send users who like specific posts an email with links to products shown in the pictures. However, these are not organic ways for companies to get customers via Instagram; users who help sell the products get paid a commission, and the links still require several steps to make purchases. (CIO.com also reached out to Instagram for pricing details on its advertising features but didn't receive a response.)
Pinterest presents streamlined shopping experience
Pinterest's first monetization effort comes in the form of a "Buy It" button that's set to debut later this month. It will let users of the popular social bulletin board purchase items directly from the site, which is good news for online retailers.
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