How Ad-Free Social Media Could Impact Retail

Meta, by way of Instagram and Facebook, has begun offering ad-free subscription options in Europe. Starting at €9.99 per month, Instagram and Facebook users throughout the European Union can now scroll to their heart’s content without ever worrying about seeing another ad ever again.

On the surface, this move may seem like a ho-hum response by Meta to the European Union’s concerns about its data collection and privacy practices (which no doubt it is), but there is far more to the long-term implications of this headline than keeping the European authorities at bay.

Should the concept take hold, particularly here in the U.S., it could herald a big shift in the retail advertising landscape.

The Rise Of Influencers And Retail Media Networks

As users begin to embrace Facebook and Instagram ad-free subscriptions worldwide, one should expect at least some natural decline in the traditional ad spend on these platforms, and, as a result, two parties stand to benefit the most from this change — influencers and the best of the best omnichannel retailers.

For example, the power of the influencer has been gaining steam for some time now, and the best influencers already have dedicated followings across social media. Ad-free social media will not impact this one iota. Meaning, Joe and Jane consumer will still be following the same influencers across whatever versions of Instagram, with ads or without ads, they choose.

The influencer then will be catapulted to the forefront of nearly every marketing strategy, as he or she will likely be seen as a bona fide outlet for any brand that wants to drive visibility in a less ad-centric social media landscape.

By a similar token, the best omnichannel retailers are also in position to reap similar rewards for a couple of reasons.

First, direct-to-consumer (DTC) companies, who have historically leveraged targeted social ads to reach their audiences, and who have already been feeling the negative impact of Apple’s own privacy changes over the last few years, will now find it even more difficult to generate a return from these very same tactics.

Much has been made around the average DTC brand’s recent and renewed shift to explore wholesale partnerships, so the declining return on ad spend from ad-free social media will only push them to try and get their products exposed to the public on the physical store shelves of their local retailers even more. Wholesale channels, once a traditional commerce cornerstone (and for the past decade, a looked down upon one at that), will continue to reemerge as critical conduits for long-term commercial brand success.

Second, many of these very same retailers also have something else going for them – the rise of the retail media network. Savvy media buyers will no doubt begin to look to the large-scale, national retail media networks as a means to reach their high-value customers who might otherwise become unreachable through traditional social media advertising.

Meta, in an almost “careful what you wish for strategy,” could thus inadvertently become like the pied piper of retail advertising, leading brands to diversify their ad investments into retail ecosystems that offer one-to-one relationships without the filter of social media at all. Companies like Walmart
WMT
, Target
TGT
, Kroger
KR
, and others with similar national reaches all will likely benefit the most from this potential gaffe, while the small regional players will again be left fighting for table scraps.

Wholesale Sits Back Atop Its Throne

In essence, all this could mean that the nearly three decade run of the DTC e-commerce movement could finally be over, and while it may be a stretch to attribute this idea to a seemingly small headline about Facebook and Instagram going ad-free in Europe, it is justified because the headline is really just a meaningful extension of what has come before – namely, decades of DTC unprofitability, a pandemic, the rise of omnichannel retailing, privacy laws, and U.S. retailing juggernauts who have smartly refused to hand over their power to social media companies and all their thus far failed marketplace initiatives.

So buckle up and get ready for the decade of wholesaling.

Wholesaling, much to the chagrin of Silicon Valley, never went away, and it promises to be back and better than ever in the years ahead.