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The Latest Market Currency: Instagram Followers

By Sofia Celeste 25 October 2018

MILAN, ITALY - In a age where many social media start ups have seen their pizazz wax and wane into oblivion, Instagram has resisted. Now the perfect virtual storefront for budding brands and fast-swiping millennials alike, Instagram is now the latest indicator investors look to when evaluating a company’s worth… or even share resistance.

"Given the rising importance of social media for luxury brands — especially in the context of millennial growth — we believe Instagram data can no longer be ignored as a data point for luxury investors, to help them pick the winning brands," a UBS report on European luxury said earlier this month.

According to data compiled by UBS, follower engagement is more likely to lead to online retail purchases on Instagram than any other social media platform through its “see, tap, shop” feature that makes pursuing and shopping vis-a-vis visual storytelling, a virtual breeze.

Instagram’s online shopping feature gives individuals quick access to product pricing and details. After tapping on a product tag in feed or product sticker in stories, people are taken to a product description page on Instagram and are directed to the company's website for purchasing.

UBS used six key measures to determine what it calls “current brand heat” showing that top performers include Gucci, Versace, Rolex and Louis Vuitton show a clear connection between a brand’s number of followers on social channels and its revenues.

Earlier this year, HSBC luxury and retail analyst Erwan Rambourg said that brand buzz was crucial to investors in determining a brand’s near-term viability.

Riccardo Tisci is a popular designer and one of the most followed ones on Instagram alongside Tom Ford and Olivier Rousteing (Balmain creative director). His celebrity status (and connections to celebrities) will undoubtedly be an asset for the brand,” Rambourg said.

A keener market eye is needed to understand how much fashion shows have an impact on share prices. In terms of Instagram interaction, brands like Gucci, Burberry, Chanel and Michael Kors are among the top engaged.

Kering, the parent company of Gucci, for example, is listed on the CAC 40 index of the Paris Stock Exchange. Its market capitalisation today is about 49 billion euros. In 2015, when Instagram sensation Alessandro Michele was hired by the France-based corporate hegemon, its stock was trading at only about EUR160 per share.
Kering's share price has more or less consistently risen throughout Michele career to today’s high of EUR353 per share, despite a 25 percent drop since the beginning of the month due to market jitters over a retail slowdown in China.

And while sales of marquee brands like Gucci, have recently slowed in terms of growth due to uncontrollable economic factors, its Instagram engagement is its better than ever. Whether or not that will be enough of a catalyst to weather a rough year full of macro headwinds... remains to be seen.

 

 

 

Sofia Celeste
FAIRPLAY Editor-in-Chief

When she is not hunting down the latest in tech and fashion, Sofia Celeste is scouting artisan talent for her online magazine bacoluxury.com. Born in the US and raised on the Pacific Island of Guam, she went on to write for Dow Jones Newswires and the Wall Street Journal. Her work is now regularly published in top fashion publications NOWFASHION and WWD.

MILAN, ITALY - In a age where many social media start ups have seen their pizazz wax and wane into oblivion, Instagram has resisted. Now the perfect virtual storefront for budding brands and fast-swiping millennials alike, Instagram is now the latest indicator investors look to when evaluating a company’s worth… or even share resistance.

"Given the rising importance of social media for luxury brands — especially in the context of millennial growth — we believe Instagram data can no longer be ignored as a data point for luxury investors, to help them pick the winning brands," a UBS report on European luxury said earlier this month.

According to data compiled by UBS, follower engagement is more likely to lead to online retail purchases on Instagram than any other social media platform through its “see, tap, shop” feature that makes pursuing and shopping vis-a-vis visual storytelling, a virtual breeze.

Instagram’s online shopping feature gives individuals quick access to product pricing and details. After tapping on a product tag in feed or product sticker in stories, people are taken to a product description page on Instagram and are directed to the company's website for purchasing.

UBS used six key measures to determine what it calls “current brand heat” showing that top performers include Gucci, Versace, Rolex and Louis Vuitton show a clear connection between a brand’s number of followers on social channels and its revenues.

Earlier this year, HSBC luxury and retail analyst Erwan Rambourg said that brand buzz was crucial to investors in determining a brand’s near-term viability.

Riccardo Tisci is a popular designer and one of the most followed ones on Instagram alongside Tom Ford and Olivier Rousteing (Balmain creative director). His celebrity status (and connections to celebrities) will undoubtedly be an asset for the brand,” Rambourg said.

A keener market eye is needed to understand how much fashion shows have an impact on share prices. In terms of Instagram interaction, brands like Gucci, Burberry, Chanel and Michael Kors are among the top engaged.

Kering, the parent company of Gucci, for example, is listed on the CAC 40 index of the Paris Stock Exchange. Its market capitalisation today is about 49 billion euros. In 2015, when Instagram sensation Alessandro Michele was hired by the France-based corporate hegemon, its stock was trading at only about EUR160 per share.
Kering's share price has more or less consistently risen throughout Michele career to today’s high of EUR353 per share, despite a 25 percent drop since the beginning of the month due to market jitters over a retail slowdown in China.

And while sales of marquee brands like Gucci, have recently slowed in terms of growth due to uncontrollable economic factors, its Instagram engagement is its better than ever. Whether or not that will be enough of a catalyst to weather a rough year full of macro headwinds... remains to be seen.

 

 

 

Sofia Celeste
FAIRPLAY Editor-in-Chief

When she is not hunting down the latest in tech and fashion, Sofia Celeste is scouting artisan talent for her online magazine bacoluxury.com. Born in the US and raised on the Pacific Island of Guam, she went on to write for Dow Jones Newswires and the Wall Street Journal. Her work is now regularly published in top fashion publications NOWFASHION and WWD.

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