Instagram's New Affiliate Tool Brings Influencer Marketing Closer to Proving ROI

For brands, it has always been difficult to prove a return on investment when it comes to influencer marketing. Measuring swipe-up links, post engagement, promo codes and links in Instagram bios have all been workarounds to determine influencer worth but can only go so far. What marketers really want to know is which influencers are directly leading to which product sales.

Last week, Instagram announced it was testing a native affiliate tool that could remedy the matter, helping demystify just how far marketers’ spend can go with creators. It’s a category that has only grown during the pandemic, spurred by people spending more time on social media as well as brands leaning further into e-commerce and live shopping.

Not only does the new tool, along with other new monetization creator features announced, provide more ways to keep influencers happy and engaged on Instagram, but influencer marketing agencies say a move toward affiliation tools will also keep marketers loyal to the platform. With more data available in-platform, some agencies say they are reassessing their partnerships with outside affiliate networks.

“The new affiliate monetization tool is leading a transition from influencer marketing being purely for brand lift to now being a trackable growth marketing channel for brands,” says Ali Fazal, VP of marketing at influencer software platform Grin, which works with brands such as Kim Kardashian’s Skims, Movado’s MVMT, Rhone and Kopari Beauty, one of the beauty brands part of Instagram’s alpha test of the new feature, to find influencers and track metrics for their campaigns. “Similar to email or SMS marketing, this tool directly tracks how many people are specifically purchasing products from which influencers—adding a new level of commerce understanding for brands.”

What marketers can expect

Instagram’s new affiliate tool is being tested both in-feed posts and in Stories, an Instagram spokesperson confirmed. The tool is starting off with a select group of influencers and products from beauty brands such as Sephora, Benefit Cosmetics, Kopari Beauty, Mac Cosmetics and Pat McGrath Labs. With the test and beyond, brands will be the ones to set the commission rates for the posts. Influencers working with brands to tag products in their posts or Stories will lead shoppers to an in-platform checkout, so all sales happen within the app.

An Instagram spokesperson has shared more details into what insights marketers can expect from the new tool when it rolls out after the initial test. When using affiliate tags in-feed or Stories, marketers will be able to see insights under the Commerce Manager insights section on Facebook, under “affiliate” in the “promotions” tab. Brands and merchants will be able to see both the overall performance of their affiliate creator campaigns and insights at the creator level, with all insights customized by time period.

The social commerce game

The new monetization tools come as Instagram is facing more competition from competitors when it comes to social commerce and retaining creators who can drive brand campaigns. Last July, TikTok launched its $200 million creator fund, letting users earn money from their videos and in October, the platform partnered with Shopify to let merchants create and run campaigns directly from the Shopify dashboard. TikTok has also unleashed new e-commerce tools for brands and has leaned into live shopping. Last month, YouTube announced a $100 million fund for top creators on its TikTok competitor YouTube Shorts. Instagram’s new affiliate tool comes just in time.

While other platforms might pay out more to influencers, the new affiliate tool aims to make both creators and marketers happy, and marketers on Instagram have been unhappy for a long time when it comes to data availability.

Inmar Intelligence, a platform that tracks commerce transactions, recently surveyed 211 brand marketers and found that while 86% of marketers believe Instagram is the most impactful in driving social commerce, 28.5% believed attributing influencer content to sales is difficult through the platform.

“Instagram hasn’t been friendly in helping brands track the effectiveness of influencer marketing. So, if they don’t continue to enhance their measurement and reporting features they will be left behind as TikTok gains traction among brands and consumers,” says Sarah Hughes, senior product marketing manager at Inmar Intelligence.

Help eliminate fraud

With more direct insights for marketers, many say it could help eliminate fraud in influencer marketing, which has turned some marketers away from the tactic altogether, especially on walled garden platforms that have historically been known to keep data to itself like Facebook. “There has been so much fraud and uncertainty around the effectiveness of influencer marketing over the past few years that we are really excited for a tool like this,” says Craig McDowell, media director at ad agency TDA Boulder, which works with brands like Champion Pet Foods and FirstBank.

The fact that Instagram is building out an affiliate solution also has some influencer agencies rethinking the networks and affiliate networks they’re currently working with. Camille Vazquez, director of partnerships at Power Digital Marketing, which runs influencer campaigns for brands like HBO Max and Mielle Organics, partners with platforms like LiketoKnowIt via rewardStyle and ShopStyle, which influencers use to monetize their content. However, Vazquez says these platforms don’t offer visibility into who is driving performance, just results from the platforms as a whole. “With Instagram’s new native tool, we’ll likely be able to attribute order volume and revenue directly to the influencer and affiliate marketing campaigns,” she says.

When it comes to future influencer contracts, Fazal can see brands moving away from flat rates, or even ones paid at a CPM basis, and pay larger commission percentages with influencers that sell more products based on insights from Instagram. The type of influencers used might also evolve.

“This change may lead brands to develop more meaningful relationships with nano and micro-influencers if they’re seeing more engagement and sales facilitation from those with smaller followings yet better target audiences,” Fazal explains. “In that instance, brands may opt to share a larger commission percentage with influencers that are resulting in ROI—and this new feature gives an easier roadmap to track this. Overall, this new tool may help broaden and eventually level the playing field more for content creators.”