Billions of internet users like you and me, pay zero bucks to use social media sites.

This leaves us pondering as to how they earn their revenue by providing free social media platforms to so many users from around the world. The one word answer is “Advertising”.

A crucial observation, as was rightly stated in the Netflix documentary ‘The Social Dilemma’, is that if you are not paying for a product, the product is you. Social media sites gather a certain set of audience, which runs into millions, at one place i.e. the social media platform. This gives businesses a chance to advertise their products to such huge masses of people, at the same place and time, which was not possible with traditional marketing methods.

Social media brought with it entirely new ways of sharing information, generating source of income, staying connected with loved ones and much more. User friendliness and the free-to-use feature increased the traffic on social networking sites. This increased traffic on social media harboured a well balanced demand and supply of content. Social media sites gave people a platform to showcase their talents to people across the globe, hone their creative side, a new source of entertainment, infotainment, etc. Content creators earned money from their content on YouTube, Facebook, etc. which gradually developed into a source of earning big bucks for content creators from social media platforms. This was possible due to the wide reach that these platforms provided. Until recently, content creators could grow their personal brand organically without having to pay social media sites to reach their desired audiences. However, due to the growth potential and the revenue generation goals of these platforms, lately there has been a downward trend in the organic growth that was once achievable rather easily. Instagram’s algorithm is designed in a way to show you content that they think you might love. This way, Instagram succeeds in getting you to spend more time on the platform and showing more and more ads during that span. Organic growth was simpler earlier and depended majorly on the supply and demand of content in various niches and not on the bucks that content creators paid to these sites to reach audiences.

Users first noticed this decline in organic growth and engagement rates in Facebook, and other social media sites like Instagram have seemed to catch on. A study conducted by Social@Ogilvy revealed that organic growth for brands on Facebook decreased from 12.05% to 6.15% between October 2013 to February 2014. Meanwhile, another article by Neil Patel revealed that organic reach of pages on Facebook had fallen to 2% to June 2016. Whereas, in 2019, this figure hovered around as low as 1%. Given this downward trend, it is not surprising that the engagement rate on Instagram decreased from 1.2% to 0.8%. According to RivalIQ’s analysis, which was based on a different data set, the median engagement rate on Instagram in 2020 decreased from 1.60% to 1.22%. This decreasing engagement rate naturally led to businesses and even content creators and influencers to pay money in order to reach their desired audiences. While this downward trend in engagement rate may have been expected by the brands and businesses on social media, however the changing algorithm has affected influencers as well. As part of their influencer marketing campaigns, brands choose influencers who not only resonate to their brand and brand values, but also those who consistently have a high engagement rate. Due to the latest updates in Instagram’s algorithm, influencers and content creators have come out and talked about how they are not receiving the same kind of engagement levels as before. A low engagement level does not look good for influencers as it impacts the potential brand deals and collaborations. This further affects revenue generation for influencers and existing brand associations. Instagram mainly has certain decisive factors that create your feed, consisting of Interest, Relationship, Timeliness, Frequency, Following and Usage. Understanding each of these decisive factors helps to overcome the challenges posed by Instagram algorithms. Meanwhile, other ways to groworganically are to focus on your core audience, optimize your social media handles, strategize your content, engage with your audience, analyze each post with in-app insights tools. Further, in case you need a little push to grow, consider paid ads as the audience you attract from sponsored posts also help you gain followers that are authentic. Merely due to the challenges that the algorithms pose, social media has not become redundant. In fact, it is quite the opposite. There is more and more quality content being churned out everyday, more and more businesses getting on board to have a social media presence. More importantly, social media is the new marketplace and influencer marketing is the new age marketing.