L2 hosted last week the Digital Leadership Academy, a two-day clinic covering various topics across mobile, social media, and video. Among questions submitted by attendees was a request to elaborate on why brands should shift budgets from display advertising to product placement.

A look at the shift in ad budgets shows that social media has the highest year over year growth in ad spending. By the end of 2016, social media ad spending will have increased by nearly 50%.

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This growth in ad spend also means social media advertising has become more competitive. Organic brand reach has become non-existent on Facebook and is nearing zero on Instagram, forcing brands to spend in order to have an audience on these platforms. However, product placement is an effective way for brands to reach an audience outside of their own – especially on Instagram where 87% of consumer interactions with brands happen.

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Anastasia, Kiehl’s and Valentino collaborate with influencers that post product photos with their own Instagram accounts, which the brands then repost. Anastasia posts on average seven photos per day on the platform, and much of the content is reposts from makeup artist and models with more than 10,000 followers.

This product placement strategy is paying off for Anastasia in sales, placing it as the fastest-growing beauty brand in the first half of 2015.

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