LONDON, United Kingdom — When Andrew Jennings launched minimalist watch brand Larsson & Jennings in April 2012, Instagram was still young. Only 18 months after launch, with 30 million users (a fraction of its current user base, which exceeds half a billion people), the platform had just been acquired by Facebook. But Jennings was quick to identify its potential for driving buzz and sales for his fledgling direct-to-consumer brand without a large marketing budget. Through a combination of his own  content and collaborations with emerging influencers, by the end of 2013, Larsson & Jennings had acquired 100,000 Instagram followers. Over the same period, Larsson & Jennings drove £2.5 million (about $3.18 million) in revenue. While "it is impossible to draw an exact correlation," Jennings says, "[through Instagram] we managed to reach a much bigger audience than any print or other digital marketing would have been able to … and during that time we did have a really big spike in sales."

Larsson & Jennings certainly wasn't the only emerging brand to leverage the marketing opportunity on Instagram. When Charlotte Beecham launched accessories brand Charlotte Simone in 2012, she says, "I had a pretty shoddy website so Instagram was substantial in terms of getting the brand out there and generating sales." Since then, she says, the link between Instagram activity and sales has become stronger. Last year, social media drove 40 percent of the brand's sales and when Beecham posted a picture to Instagram of Gigi Hadid wearing a Charlotte Simone "Sass Cap," the company sold 53 of the £125 ($159) caps in 24 hours.

Indeed, Instagram’s fashion-friendly focus on imagery, features that allow users to easily discover new accounts, and its community of influencers willing to endorse products made the platform well-suited for young brands looking to grow their reach without paying for advertising or relying on retail stockists to get in front of new customers.

Instagram "is incredibly democratic," says Eva Chen, head of fashion partnerships at the company. "[It] allows brands to take control of their own narrative … especially if they're small, it levels the playing field."

In the last few years, however, Instagram has evolved, growing to over 500 million monthly users who post more than 95 million photos and videos each day. As the platform has swelled, has the opportunity that once existed for emerging brands started to shrink?

There's so many publishers, so many influencers, so many brands … There's more talent [so] it's harder to get discovered.

Certainly, Instagram is much more crowded today, with everyone from megabrand Burberry to fast fashion behemoth H&M to supermodel Kendall Jenner jostling for a place in users' feeds. For unknown brands, it's becoming harder to stand out. "There's so many publishers, so many influencers, so many brands … There's more talent [so] it's harder to get discovered," says Evan Asano, founder and chief executive officer of influencer marketing agency Mediakix.

James Street, co-founder of British watch brand Shore Projects, which launched in 2014, cites Instagram as the “lifeblood” of the brand’s initial sales growth. But, he says, “we’ve [seen] other brands that have come in that are newer and it’s been much harder for them to grow their Instagram following. I’m sure it’s just the amount of people flooding the platform now.”

It has also become more costly. In late 2013, Instagram introduced its own paid advertising products, the platform’s first step towards commercialisation, and earlier this year it announced a new algorithm that would sort users’ feeds according to “the likelihood you’ll be interested in the content.” While the company says the move is a response to users missing on average 70 percent of the posts in their feed, some brands are concerned the shift will mean fewer people see their content. They also see the move as a step towards Facebook’s business model, in which brands must pay for meaningful reach. “Instagram isn’t at the level of Facebook, where everything is supported, but it definitely is becoming a little bit more of a commercialised platform,” says Claude de Jocas, intelligence group director at consultancy L2.

The price of influencer marketing (paying Instagram personalities to support a product) has risen significantly as well. “Influencers are now very much pay-to-play,” says de Jocas. “Back in the day, these guys were all just getting started and it was enough to be providing influencers with free product … [Instagram] celebrities now can command relationship contracts that look and feel very, very similar to traditional celebrity face of the brand [contracts].” Jennings concurs, “it’s not as cost effective to work with these influencers as [when] we used to.”

These developments have made it harder for emerging brands to leverage Instagram for growth, compared to in its early days, when a first-to-platform advantage and low-cost influencer collaborations helped brands quickly accumulate followers, ripe for conversion into customers.

Today, new brands must shift their strategies to make a meaningful impact on Instagram. The new algorithm prioritises the most engaging content, meaning posts with the most likes and comments. Quality of posts, not quantity, is key. Similarly, brands must concentrate on the quality and engagement levels of their followers, rather than just boosting total follower counts. “Everyone is chasing a higher number of followers,” says Chen. “It’s better when brands focus on the followers that they do have and work on making a community.”

Everyone is chasing a higher number of followers. It's better when brands focus on the followers that they do have and work on making a community.

What users want to see has also evolved. “When Instagram started, people were putting up more marketing images … and now what people want is behind the scenes and the story behind the product,” continues Chen, who says emerging brands are well-placed to capitalise on this. “Smaller brands are more willing to go out on a limb and be a little bit more authentic, or maybe it’s the founder themselves posting.” Charlotte Beecham runs Charlotte Simone’s Instagram account herself, posting everything from pictures of herself packing up boxes to snaps from glamorous events. “It’s a true story about a young woman starting a brand and the ups and downs and day-to-day existence of running a business … In truth, it’s the nitty-gritty that has set me apart and is relatable,” she says.

Despite their rising cost, influencers remain the most effective way for emerging brands to activate on Instagram, because of the value of their “personal recommendation,” says Sarah Ware, founder and chief executive officer of influencer management company Markerly. Small brands should also consider working with “micro” influencers — Instagram personalities with tens of thousands of followers rather than millions — who are cheaper to work with and often have better engagement than mega influencers. “From a cost perspective, for emerging brands, you’re going to get the most bang for your buck gifting to those [micro] influencers versus potentially paying someone who’s much larger to post,” says Jen Rubio, co-founder of direct-to-consumer luggage brand Away, who estimates 15 percent of customers discovered the brand through social media since it launched in late 2015.

Despite its evolution, for many, Instagram remains the social platform best-suited for fashion brands. “Twitter and Facebook just don’t have the engagement,” says Mediakix’s Asano. “The users of Instagram are out discovering and looking for fresh new content.” Instagram’s fashion fans are particularly active — a recent survey by the company showed the average European Instagrammer interested in high street fashion checks their feed 15 times a day and posts three times more often than the average user. What’s more, one in three Instagrammers say they have bought a fashion item they discovered on the platform, according to the same survey.

While Snapchat has been gaining momentum within the fashion industry, it lacks strong discovery features (there is no way of tagging or easily searching content), which have allowed emerging brands to grow quickly on Instagram. “It’s not like Instagram where you can easily discover new people to follow — you have to do a lot of marketing and advertising of your account,” says Ware. L2’s de Jocas agrees: “It’s really reliant on knowing the influencers, actively adding them, actively seeking them out.”

Snapchat’s content is also ephemeral, making some brands reluctant to invest in the platform as they have done with Instagram, continues de Jocas. “Would you be willing to give out samples of products or write a $10,000 or $25,000 cheque for a piece of content that you know is going to last 24 hours?”

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