Does Zara have an affiliate program
This is how affiliate marketing works on Instagram
With influencers and a clever trick, Liketoknow.it & Co. earn money on Instagram
Leonie Hanne also uses Liketoknow.it for affiliate marketing on Instagram. (Photo: Ohhcouture)
Selling on Instagram - a dream of many brands. But without being able to post a direct link under an image, this is difficult to do. Thanks to tools like Liketoknow.it, there is now at least a workaround for Instagram influencers and brands to generate affiliate links. We show how affiliate marketing works on Instagram, who earns from it and why a German startup is now also participating.
In mid-2015, Rewardstyle bagged a $ 15 million investment from Maverick Capital, among others. The company's main product is an affiliate network for fashion bloggers, which is said to have generated $ 500 million in sales in 2015. With the money, however, Rewardstyle is also pushing a newer project internationally: Liketoknow.it. The service allows influencers, publishers and brands to set affiliate links to the products shown under their Instagram posts - at least indirectly.
Influencers and brands expect a lot of sales
Liketoknow.it avoids the problem that Instagram does not allow links under the individual posts with a clever trick: influencers register with the service, enter the affiliate links to the outfits in a web interface and receive a Liketoknow.it -Link (e.g. www.liketk.it/2inYP). They then post this in the description of the respective Instagram photo - where it cannot be clicked due to the Instagram requirements. Every Instagram user who likes this photo and is logged in to Liketoknow.it will then receive an email with the links to the influencer shop. He then comes to the actual online shop via the landing pages of the influencers and brands. If the user buys, the influencer receives an affiliate commission, part of which is kept by Liketoknow.it.
What sounds complicated is apparently a success story. In June 2015, the service reported that over 850,000 Instagram users have registered and want to receive emails from Liketoknow.it. At the same time, there are thousands of influencers on board who provide their photos with the appropriate links. Brands also use the service to refer directly to the products in their own Instagram channels. “Online retailers should understand Liketoknow.it as content marketing with a retargeting element. The users were particularly interested in a product and requested more information about it, ”explains the CEO and co-founder of Rewardstyle Baxter Box, who founded the company together with his wife Amber Venz Box. Asos and Urban Outfitters were among the partners from the very beginning, and Vogue is also monetizing its Instagram account. The tool generated $ 30 million in sales in the first 15 months of its existence and is now available in eleven countries.
The competition is also growing from Germany
Liketoknow.it has also reached many well-known influencers in Germany. Leonie Hanne von Ohhcouture (over 244,000 subscribers) last said in our podcast that she uses affiliate links on Instagram (she will tell more about this at our next New Platform Advertising conference). Other well-known fashion Instagrammers such as Caro Daur (518,000 subscribers) or Novalanalove (413,000 subscribers) (Novalanalove also comes to New Platform Advertising) regularly post Liketoknow.it links. In total, the hashtag #liketkit appears in over 750,000 Instagram posts for these affiliate posts. The influencers sometimes receive up to 20 percent of the sales price as commission. A post from Leonie Hanne, for example, has over 7,000 likes. If ten percent of them are registered with Liketoknow.it, 700 will receive an email with the links to their affiliate shop. A few hundred euros per post should be earned in this way. Liketoknow.it has contracts with some shops and brands to enable these high affiliate commissions. Of course, that makes it all the more difficult for other projects. In the USA, for example, Like2Buy from the analysis platform Curalate or Have2Have.it from Soldsie are trying. The two services pursue the same goal as Liketoknow.it - sending Instagram users to online shops - only in a slightly different way. Instagrammers and brands who use one of the two tools include the link to their shop in the account description (the only place on Instagram where clickable links work).
You can find the influencer's shopping pages on the StyleLike homepage.
This makes it easier for Instagram users overall because they don't have to register for the services first, but it works less convincingly in practice. Many users do not want to be torn out of Instagram in order to buy the products they have discovered. An email as a reminder after visiting Instagram probably works better.
Now a German startup also wants to play in this area. StyleLike has only been online for two weeks and was actually planned as the German Liketoknow.it - before the US service quickly went live in this country. Christian Doberschütz raised the project while traveling with his wife in Thailand and South America and noticed how difficult it is to be confirmed as an Instagram tool: "The Instagram API is the basis for our project." The platform apparently takes individual projects very carefully: "Instagram refused us the first three attempts without a reason, it only worked on the fourth attempt," says StyleLike founder Christian Doberschütz Online Marketing Rockstars.
Avoid the superiority of the US model
Doberschütz takes on the fight with the big number from the USA. But there are several hurdles: “The biggest problem is getting people to register.” Many average Instagram users are skeptical of passing on their data, including their email address, only to then shop for the influencer's outfits can. It is all the more impressive that Liketoknow.it has managed to attract so many Instagram users to its own service. Because there were no registrations, the StyleLike founder had to rethink quickly. "We are now sending users directly to influencer shopping landing pages without registering." With this, StyleLike is now more like the other two competitors Like2Buy and Have2Have.it.
The second big problem with Instagram affiliate projects is attracting influencers and brands. So far, things have been going very well for Doberschütz: "We wrote to 200 influencers, they had between 10,000 and 50,000 followers." Of these, around 15 percent had expressed interest. “We now have 25 influencers in our portfolio, and by the end of April there should be 50.” Doberschütz sees his chance with fashion bloggers who may not be among the absolute kings of followers, but who are authentic to their target group. Overall, StyleLike reaches over 390,000 Instagram users through 25 influencers. In the two weeks Doberschütz generated over 10,000 affiliate link clicks. He doesn't tell you how many sales you end up with. Because the affiliate commissions are his source of income. The influencers receive a fixed monthly fee. "We pay lump sums, that's what influencers with a 'smaller' reach have learned, and they also get their money immediately," explains Doberschütz. Unlike Liketoknow.it, the influencers at Stylelike get their money in advance, the startup then has to get the expenses back with the affiliate commissions. According to the StyleLike founder, the amounts paid to the influencers result from the followers and the engagement rate (likes and comments). For the most part, the payments would be 100 euros a month.
Other ways to monetize
Because it is so difficult to get users to register, Doberschütz is already thinking about new ways to make the project a success. He has built in an exit intent layer. If you want to leave the StyleLike page, a pop-up appears promising a free e-book about Instagram success - if you leave your email address. In this way, Doberschütz wants to retain users in the long term. Because in the future he wants to build StyleLike into a monetization platform for fashion influencers - no matter where they post their content. He also wants to found an Instagram Academy. In online courses, everyone should learn how to build more followers on Instagram. And brands would long for better analysis options for visual content and so Doberschütz is considering setting up a platform for influencer stock photos. There is a lot on the agenda. So it doesn't seem too easy to compete with Liketoknow.it in its core business. That's why Doberschütz is also looking for other areas to earn money.
Because overall, the business model is not only completely dependent on Instagram's will when registering. If the platform changes its interface or develops its own affiliate tool, even Liketoknow.it should get into trouble. A current change at Instagram should still play into the hands of the tool providers. With the introduction of the algorithm-filtered news feed á la Facebook, many brand accounts with little engagement are likely to be displayed less often, after all, Instagram wants to win over companies as advertisers. Influencers usually have a high engagement rate and should therefore continue to end up in the news feeds of their subscribers and thus focus on the affiliate links from Liketoknow.it, StyleLike & Co.
Are you interested in new, fast-growing platforms such as Snapchat, Instagram & Co. and the marketing opportunities there? Then you should definitely come to our New Platform Advertising conference in Hamburg - you can find more information and tickets here!
Update April 8, 2016:
As managing director Ralf Mardeis told us, his agency PeakPoint has been using the French tool Effigram since the beginning of the year, which also leads to affiliate shops via a link in the Instagram profile description.
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