Signalling quality on Instagram ads

I have mentioned multiple times here before that I love Instagram advertising. I love that whatever Instagram learns from my likes (and not likes) on the platform, and through the various pixels that Facebook leaves all over the interwebs, gets used in showing me highly relevant advertising.

Rather, ever since I started using Instagram, I loved the advertising for its visual quality (that made it hard to distinguish if it was an advertisement or native content), and as things have gotten more relevant over time, I’ve started clicking through. And as I’ve started clicking occasionally, the advertising has become more relevant.

I’m sure some silicon valley marketer has some imagery about flywheels. I’m reminded of that hamster spinning this wheel when I’d gone to this animal farm near Bangalore last year.

In any case, I read this article about “the hard thing about easy things“. The basic theory, if I understand it right, is that by commoditising all the tools of production when it comes to direct to consumer selling, the business of direct to consumer selling has gotten that much harder.

The article goes on to say that unless the brand has a competitive advantage in manufacturing (or sourcing by any other means), it is pretty much impossible to make money off direct to consumer products – you struggle to repel the attack of the clones, and you have to spend increasing amounts of money on online marketing (through Google and Facebook).

While this makes sense (or not?) from an investment and entrepreneurship perspective, it got me wondering – as a consumer, how can I distinguish the quality direct to consumer products from those that have somehow simply managed to get into my feed?

Some advertising is like a peacock’s tail – it doesn’t signal any direct value about the brand being advertised. However, it signals that if the brand can afford to spend such huge amounts of money on this form of advertising, it ought to be a brand with sufficient spare cash flow that it is a good brand.

For example, when Vivo got title sponsorship of the IPL, it not only created awareness (which possibly existed thanks to its retail stores and advertising on Amazon) but also signalled that it is a “good brand” since it had bought prime advertising real estate.

Similarly, when a brand advertises on the SuperBowl, the actual dollars per eyeball may not make sense. However, when you add in the signalling value of having been there on SuperBowl (“if a brand can afford to advertise on SuperbOwl, it ought to be a good brand”), it starts making sense.

This works with a lot of mass media advertising. Front page of Times of India is premium because of peacock’s tail. Advertising in the IPL for the same reason. Perhaps similar with hoardings on the way out of airports. And booking prime time slots on popular television shows.

The problem with online advertising is that it is so targeted (and algorithmic) that this signalling effect goes away. Your instagram feed is like the Times of India where every page is similar to every other page.

From that perspective, it is hard to determine whether an advertisement represents a quality product when it appears on your Instagram timeline.

I bought Vahdam tea after someone recommended it to me on Twitter. I bought Paul and Mike’s chocolates after a friend wrote her appreciation for it on Instagram. When I started buying Blue Tokai coffee, I needed good coffee powder and was in the mood for exploration, but was helped by multiple friends and acquaintances vouching for it .

Marketing solely using digital means runs into this problem of not having the signalling effect. And that means you need to invest in “social” also, however you can imagine that to be. Then again, people have started seeing through “influencers”, like how they started seeing through “endorsements” a generation ago.

Amazon and brand-building

Sometimes shopping on Amazon feels like shopping in Burma Bazaar or National Market or any of those (literally) underground “shopping malls” where you get cheap imported stuff of uncertain quality. This is especially true when shopping for things like children’s toys and some electronics, where you don’t have too many established brands.

The only times I feel completely comfortable shopping on Amazon is when I’m buying known brands – like last month when I bought a LG monitor or Logitech keyboard and mouse. LG and Logitech have built their brands sufficiently outside of the Amazon ecosystem that I trust their quality even while buying on Amazon.

This is not the case when it comes to other categories, though. One day I was browsing for toys on Amazon and was simply unable to decide what to buy – it all looked so “cheap”. Finally, my wife noticed one brand of which we already had a toy (that we liked), and we ended up buying that (that was a sound decision). Once again, we had used our knowledge of brands that had build their brands outside of Amazon to make our decision.

The thing with Amazon is that it is an “everything store” – one store to serve all markets. That’s not how offline markets work. In offline markets, stores fairly easily differentiate themselves based on the markets that they serve – by their locations, by their price points, by the overall “look and feel” and so on. That way, when you go to a store that you know serves your segment, you can be confident that what the store sells you is what you’re looking for.

This is not the case with Amazon. Since one store serves all, it is very difficult to know upon seeing a product whether it is “made for you”. Well, Amazon has information about your previous purchases on the platform, which should give them a good idea of the “segment” you belong to, but I guess making money from advertisers on the platform trumps making your choice easier?

From this perspective, if you are a hitherto unknown brand trying to sell on Amazon, it makes sense for you to build your brand elsewhere. Here, we run into the “double cost problem” (that I had used to describe long ago why Grofers is not a sustainable business). Essentially, building a brand is expensive and once you’ve spend your dollars on (let’s say) the Facebook ecosystem to build your brand, does it make sense to also pay Amazon to push up your product when it comes to search?

It seems like brands are now choosing one way or the other. Mass market brands (it appears) are sticking to the Amazon ecosystem. Some premium brands are using Instagram to acquire customers, and then using the Shopify-Razorpay-Delhivery ecosystem to deliver. Some other premium brands are using a combination of Instagram and Amazon, but only using the latter as a fulfilment mechanism – not spending money to advertise there.

In any case, it seems to me that building brands on Amazon is not a viable business. Now I’m reminded of my other old post where I talk about how platforms are useful only if they aggregate unreliable supply. And this is a path that Amazon seems to have firmly taken.

And the moment you focus on branding, you are trying to send out the message that you are not “unreliable supply”. And this means that getting mixed up with other unreliable suppliers is not good for your business. Which is why you find that the direct to consumer brands that advertise on Instagram (have I told you I love instagram ads?) usually stay away from Amazon.

(you might think I’m going round and round in circles in this post. This is because it’s been about a month since I thought of writing this but only got down to it today. It’s also funny that I’m writing  this less than an hour after talking to someone who builds her brand on Instagram and then sells through Amazon (and offline shops) ).

PS: I got reminded of when I initially thought of this post. I bought a yoga mat from Amazon a couple of months ago. Quality turned out to be pathetic. And there was no way for me to know that when I was buying.

Credentialed and credential-less networks

Recently I tried out Instagram Reels, just to see what the big deal about it is. The first impression wasn’t great. My feed was filled with famous people (KL Rahul was there, along with some bollywood actresses), doing supposedly funny things. Compared to the little I had seen of TikTok (I had the app installed for a day last year), this was barely funny.

In fact, from my first impression it seems like Instagram Reels is a sort of bastard child of TikTok and Quibi (I took a 90 day trial of Quibi and uninstalled after a month, having used it 2-3 times and got bored each time). There is already a “prior reputation network”, based on people’s followers on the main Instagram product. And Reels takes off on this.

This means that for a new person coming into this supposedly new social network, the barriers to entry to getting more followers is rather high. They need to compete with people who already have built their reputations elsewhere (either on the Instagram main product, or in the case of someone like KL Rahul, completely offline).

I was reading this blogpost yesterday that compared and contrasted social networking in the 2000s (blogs) with that of the 2010s (twitter). It’s a nice blogpost, though I should mention that it sort of confirms my biases since I sort of built my reputation using my blog in the late 2000s.

That post makes the same point – blogs created their own reputation networks, while twitter leverages people’s reputations from elsewhere.

The existence of the blue checks points to the way in which the barriers that a new blogger faced entering a community was far lower than is currently the case on twitter. The start-up costs of blogging were higher, but once somebody integrated themselves into a community and began writing, they were judged on the quality of that writing alone. Very little attention was paid to who that person was outside of the blogosphere. While some prominent and well known individuals blogged, there was nothing like the “blue checks” we see on twitter today. It is not hard to understand why this is. Twitter is an undifferentiated mass of writhing souls trying to inflict their angry opinions on the earth. Figuring out who to listen to in this twist of two-sentences is difficult. We use a tweeter’s offline affiliations to separate the wheat and the chaff.

For the longest time, I refrained from putting my real name on this blog (though it was easy enough to triangulate my identity based on all the things I’d written here). This was to create a sort of plausible deniability in case some employer somewhere got pissed off with what I was writing.

Most of the blogosphere was similarly pseudonymous (or even anonymous). A lot of people I got to know through their blogging, I learnt about them from their writing before I could know anything else about them (that came from their “offline lives”). Reputation outside the blogosphere didn’t matter – your standing as a blogger depended on the quality of blogposts, and comments on other people’s blogposts only.

It is similar with TikTok – it’s “extreme machine learning” means that people’s reputations outside the network don’t matter in terms of people’s following on the network, and how likely they are to appear in people’s feeds. Instead, all that matters is the quality of the content on the platform, based (in TikTok’s case) on user engagement on the platform.

So as we look for an alternative to replace TikTok, given that the Chinese Communist Party seems to be able to get supposedly confidential data from it, we need to remember that we need a “fresh network”, or a “credential free” network.

Instagram has done something it’s good at, which is copying. However, given that it relies on existing credentials, Reels will never have the same experience as TikTok. Neither will any other similar product created from an existing social network. What we need is something that can create its own reputation network, bottom up.

Then again, blogging was based on an open platform so it was easy for people to build their networks. With something like TikTok relying heavily on network effects and algorithmic curation, I don’t know if such a thing can happen there.

Advertising

When I first joined Instagram in 2013 or 2014, the first thing that fascinated me about the platform was the quality of advertisements. At that point in time, all advertisements there looked really good, like the pictures that the platform was famous for helping sharing.

It wasn’t like the clunky ads I would see elsewhere on the internet, or even on Facebook – which mostly stuck out like a sore thumb in the middle of whatever content I was consuming at that point in time. Instagram advertisements looked so good that I actually paid them considerable attention (though I hardly clicked on them back then).

Over the years, as Facebook has gotten to know me better (I hardly use Facebook itself nowadays. But I use a lot of Instagram. For now I’ll believe Facebook’s claim that my WhatsApp information is all encrypted and Facebook doesn’t learn much about me through that), and the advertisements have gotten better and more relevant.

Over the last one year or so (mostly after I returned to India) I’ve even started clicking on some of the ads (yes they’ve become that relevant), giving Facebook even more information about myself, and setting off a positive feedback loop that makes the advertisements more relevant to me.

Over the years I’ve attended talks by privacy experts about the privacy challenges of this or that platform. “They’ll get all this information about you”, they say, “and then they can use that to send you targeted advertisements. How bad is that?”. If I think about all the problems with telling too much about myself to anonymous platforms or companies, receiving better targeted advertisements is the least of my worries.

As a consumer, better targeted ads means better information to me. Go back to the fundamentals of advertising – which is to communicate to the customer about the merits of a particular product. We think advertising can be annoying, but advertising is annoying only when the advertisements are not relevant to the target customer. 

When advertisements are well targeted, the customer gets valuable information about products that enables them to make better decisions, and spend their money in a better fashion. The more the information that the advertiser has about the end customer, the better the quality (defined in terms of relevance) the advertisements that can be shown.

This is the “flywheel” (can’t imagine I would actually use this word in a non-ironic sense) that Facebook and affiliated companies operate on – every interaction with Facebook or Instagram gives the company more information about you, and this information can be used to show you better targeted advertisements, which have a higher probability of clicking. Because you are more likely to click on the advertisements, the advertiser can be charged more for showing you the advertisement.

Some advertisers have told me that they elect to not use “too much information” about the customer while targeting their advertisements on Facebook, because this results in a much higher cost per click. However, if they look at it in terms of “cost per relevant click” or “cost per relevant impression”, I’m not sure they would think about it the same way.

Any advertisement shown to someone who is not part of the intended target audience represents wastage. This is true of all forms of advertising – TV, outdoor, print, digital, everything. It is no surprise that Facebook, by helping an advertiser advertise with better (along several axes) information about the customer, and Google, by showing advertisements after a customer’s intent has been established, have pretty much monopolised the online advertising industry in the last few years.

Finally, I was thinking about advertising in the time of adblockers. Thanks to extensive use of ad-blockers (Safari is my primary browser across devices, so ad blocking is effective), most of the digital advertisements I actually see is what I see on Instagram.

Today, some publication tried to block me from reading their article because I had my ad-blocker on. They made a sort of moral pitch that advertising is what supports them, and it’s not fair if I use an ad-blocker.

I think they should turn to banner ads. Yes. You read that right.

To the best of my knowledge, ad blockers work by filtering out links that come from the most popular ad exchanges. Banner ads, which are static and don’t go through any exchange, are impossible to block by ad-blockers. The problem, however, is that they are less targeted and so can have higher wastage.

But that is precisely how advertising in the offline versions of these newspapers works!

Something is better than nothing.

Instagram targeting

Instagram is really good at what I call “one dimensional psychographic targeting”.

Essentially, based on the photos and videos (more likely hashtags) that you see, spend time on, like and comment, the platform figures out some of your interests and targets at you advertisements of products that serve these interests. And instagram manages to combine this with demographic information (where you live, etc.) to target advertisements better at you.

For example, of late I’ve been looking at a lot of weightlifting stuff on Instagram – I follow most of the coaches at my gym, and a few other handles that post fitness stuff. I’ve even posted a video of myself deadlifting.

As a result, Instagram has been following me with advertisements related to fitness, and the combination with demographics means I’m being served stuff I can get in Bangalore. For example, last two days I’ve been seeing ads of my own gym (!!). There are ads for whey proteins and healthy foods of all kinds as well.

This targeting is not perfect – for the last few months, ever since I returned to India, I’ve been bombarded on Instagram with advertisements asking me to emigrate to Canada (I don’t know what makes it think I want to move abroad again given I’ve just moved back home). The seemingly un-targeted mattress advertisements are everywhere. The shirt advertisements as well (though recently I uploaded a picture of my wardrobe on Instagram).

Nevertheless, this is a massive step up from what marketers were able to do a generation ago, where they could at best target based on a demographic. Marketers might have created elaborate psychographic or behavioural profiles of their target audiences, but when it came to advertising, the media available (newspaper, television and outdoors) meant that they had to collapse it into a demographic profile.

Instagram is not perfect, though. To the best of my knowledge, it can only target me on one “psychographic dimension” (“interested in weight lifting”, “interested in coloured chinos”, “likes Bangalore”) along with a multitude of demographic dimensions (I’m sure it’s figured out my gender, age group and maybe even caste, even if it exists in some vector somewhere and no human knows these classifications).

However, when you have created elaborate psychographic profiles, collapsing them into one dimension is still a simplification process. And so you get a reasonable degree of error in targeting. So I’m wondering what can be done that can enable advertisers to target me with more specific products that I might be interested in.

Finally, really how much are the likes of Charles Tyrwhitt, and some mattress brand whose name I don’t recall, willing to pay for their campaigns, given that their untargeted campaigns have beaten the highly targeted campaigns of the fitness guys and coffee companies to reach my eyeballs?

Social Media Addiction

Two months back I completely went off social media. I deleted the instagram app from my phone and logged out of Instagram, Twitter, LinkedIn and Facebook on my computer. I needed a detox. And I found myself far more focussed and happier after I did that. And I started writing more here.

My first month off social media was strict. No social media under any circumstance. This was necessary to get rid of the addiction. Then, since I came back from the Maldives trip, I’ve been logging into various social media accounts on and off (about once a day on average) just to see if there are any messages and to browse a bit.

I only do it from my computer, and at a time when I’m not fully working. And as soon as the session is over I make sure I log out immediately. So the instinctive adrenaline-seeking opening of social media tabs is met by a login screen, which is friction, and I close the tab. So far so good.

In my infrequent returns to social media I’ve found that the most “harmless” are LinkedIn and Facebook (it might help that I don’t follow anyone on the latter, and if I want to check out what’s happening in someone’s life I need to explicitly go to their profile rather than them appearing on my timeline). LinkedIn is inane. Two or three posts will tell you it’s a waste of time, and I quickly log out. Facebook is again nothing spectacular.

Twitter is occasionally interesting, and I end up scrolling for a fair bit. For the most part I’m looking for interesting articles rather than look at twitter arguments and fights. I’m convinced  that twitter statements and arguments don’t add much value – they’re most likely ill thought out. Instead a link to a longer form piece leads me to better fleshed out arguments, whether I like it or not.

Mostly after a little bit of twitter scrolling, I find enough pieces of outrage, or news/political stuff that I get tired and log out. It’s only when I really need an adrenaline rush and don’t mind people cribbing that I stay on twitter for a bit of a long time (over five minutes).

Instagram, on the other hand, is like smoking cigarettes. When I smoked my first cigarette in 2004 I felt weak in the knees and a sort of high. It was in my final year of college, so I’d had enough friends tell me that cigarette smoking is addictive. And my first cigarette told my why exactly it was addictive.

So I made a policy decision at that moment that I’d limit myself to a total of one cigarette a year. I’ve probably averaged half a cigarette a year since then. My last one was in 2016.

Instagram is really addictive. It’s full of pictures, and if you avoid the really whiny accounts there is little negativity or politics. People make an effort to look nice, and take nice pictures, for instagram. So there is a lot of beauty in there. And if I choose to, especially when I’m logging in after a long time, I can keep at it for hours.

Instead I need to be conscious that it’s addictive (like my one cigarette a year rule), and pull myself away and force myself to log out. This also means that while I open twitter about once a day, Instagram is less than once a week.

I wonder what this means about the sustainability of social networks!

Context switches and mental energy

Back in college, whenever I felt that my life needed to be “resurrected”, I used to start by cleaning up my room. Nowadays, like most other things in the world, this has moved to the virtual world as well. Since I can rely on the wife (:P) to keep my room “Pinky clean” all the time, resurrection of life nowadays begins with going off social media.

My latest resurrection started on Monday afternoon, when I logged off twitter and facebook and linkedin from all devices, and deleted the instagram app off my phone. My mind continues to wander, but one policy decision I’ve made is to both consume and contribute content only in the medium or long form.

Regular readers of this blog might notice that there’s consequently been a massive uptick of activity here – not spitting out little thoughts from time to time on twitter means that I consolidate them into more meaningful chunks and putting them here. What is interesting is that consumption of larger chunks of thought has also resulted in greater mindspace.

It’s simple – when you consume content in small chunks – tweets or instagram photos, for example, you need to switch contexts very often. One thought begins and ends with one tweet, and the next tweet is something completely different, necessitating a complete mental context switch. And, in hindsight, I think that is “expensive”.

While the constant stream of diverse thoughts is especially stimulating (and that is useful for someone like me who’s been diagnosed with ADHD), it comes with a huge mental cost of context switch. And that means less energy to do other things. It’s that simple, and I can’t believe I hadn’t thought of it so long!

I still continue to have my distractions (my ADHD mind won’t allow me to live without some). But they all happen to be longish content. There are a few blog posts (written by others) open in my browser window. My RSS feed reader is open on my browser for the first time since possibly my last twitter break. When in need of distraction, I read chunks of one of the articles that’s open (I read one article fully until I’ve finished it before moving on to the next). And then go back to my work.

While this provides me the necessary distraction, it also provides the distraction in one big chunk which doesn’t take away as much mental energy as reading twitter for the same amount of time would.

I’m thinking (though it may not be easy to implement) that once I finish this social media break, I’ll install apps on the iPad rather than having them on my phone or computer. Let’s see.