How Instagram Uses Celebrity Endorsements

SOURCE: Smart Insights

The economic principle I’m exploring is institutions are the “rules of the game” that influence choices. 

My research question to help me study the economic principle is “How does the social media site Instagram influence its users to buy specific products?” 

The article published in investopedia.com titled “How Instagram Makes Money” written by Ellen Smith demonstrates this economic principle by showing why Instagram gains its main income from advertisments and how it uses celebrities to endorse products.

First, Smith writes about why Instagram is the leading social media site and how it gains all of its revenue. Of course, as we established from last blog post, Instagram gains almost all of its revenue from advertisements. Instagram has a feature that “...allows advertisers to show slideshows and link to sites outside Instagram.”. This feature is called carousel ads which “bring the potential of multi-page print campaigns to mobile phones – with the added benefit of taking people to a website to learn more,” according to Instagram’s business blog. This easy feature allows for brands that are “easily recognizable”, like Nike, to campaign for their products on yet another platform.

Secondly, Smith talks about the “growth of mobile”. Basically what this means is that the use of social media is at an all time high because most people have iphones, or some type of cellular device that keeps them connected to the online world. However, most people that are on social media are in the younger generations. Knowing this, companies try to tailor their ads to a younger audience, which brings us to the point of celebrity endorsement. Being an avid user of instagram myself, I have seen a handful of celebrities promoting products. It ranges from skin care, to waist trainers, to hair vitamins. According to pncdigital.com, celebrity endorsements are used because “Their face, names and even look alikes have millions of people following them blindly”, which in turn makes the people following them want to buy the product. I think this is an effective tactic because it has worked on me before. I have have bought makeup from the brand Glossier because a lot of the social media influencers I follow were promoting it. So clearly, this tactic works, and it’s why so many companies have been using instagram to advertise their brands.

In my next blog post, I will be researching the question, “How does instagram purposefully use tactics that makes people stay on the app for longer?”