Asos lauds effect of Instagram Stories as it reduces marketing spend

Asos talks up Instagram investment

Asos has singled out the performance of Instagram Stories in its marketing mix, saying the number of people viewing its content on the platform has almost doubled in just six months.

The online retailer today (11 April) reported stellar sales for the six months to 28 February, noting a 10% rise in half-year profits to £29.9m as sales jumped 27% to £1.13bn compared with the same period in the previous year.

On a call with analysts, chief executive Nick Beighton praised the Instagram-effect, saying the Facebook-owned platform was now more popular among its core 20-something customer base than Facebook and as such the business had maintained its investment in its “relevant, emerging content formats” including Stories.

The brand's content on the site was viewed over 30m times while videos were viewed more than 52m times, up from 40m in the previous half of the year.

Asos was one of the first to experiment with Stories ad formats when it launched last January and has become a brand that many benchmark against when it comes to successfully harnessing the app’s offering, with Instagram itself using the retailer’s strategy as a case study to lure other brands to the platform.

“When we recognise technology that can help our business, we fold in pretty quick,” Beighton said.

Now that its convinced on the value of Stories, the latest tool under the spotlight is Instagram’s shopping-enabled adverts, which launched widely at the beginning of this year.

“On one level [Instagram Shopping] could turbo charge the experience for 20-somethings but on another level it could be a real threat,” admitted Beighton.

“We do know Instagram is one of the biggest channels for our customers, it’s much bigger than Facebook, so I’d go with the positive and think about how we can make it more intuitive and friction free for our customers.”

Its experiments on the digital channel come amid a wider review of its marketing costs. It didn’t give an exact figure but as a percentage of sales, spend stood at 5% versus 5.3% in the previous period.

The savings were made as a result of “digital marketing efficiencies and a higher return on advertising spend,” said Beighton.

Though admitting the brand is on “every conceivable marketing channel”, Beighton said it is venturing offline, especially in other European markets. In the UK it ran its first out of home campaign to launch its Face and Body and Activewear lines while in France it took to TV and cinema for the first time with promising results.

“The combination of TV and cinema aren’t immediately relevant to the 20-something market in the UK but they are in the French market. But it’s an experiment,” he said.

In the US meanwhile, its PPC ad spend is under scrutiny with Beighton saying the rates “are up pretty dramatically” on various terms, though he didn’t go into detail on how it would mitigate that rising cost.

Overall, he said continued investments are enabling strong engagement levels across its customer base. Site visits increased by 25% year-on-year; average order frequency improved by 8%; average basket value increased by 2% alongside a 10 base point improvement in conversion.

Active customers are now at 16.5 million, representing a 17% increase since last year.

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