Instabrand, a Los Angeles start-up that helps strike deals between advertisers and individuals with large social media followings, announced Tuesday that it has raised $2.5 million in venture capital.
The investment is the latest sign that advertisers are looking to spend more money on campaigns in which they are promoted by celebrities whose fame comes from what they post on Instagram, Twitter or other social media apps.
Instabrand says it's fielding more demand from advertisers such as Calvin Klein, Kia and McDonald's than it can handle, and the cash is expected to allow nine months of hiring and product development in the span of two months.
In particular, Instabrand wants to find ways to understand the characteristics of the people who follow a certain influencer, or social media celebrity. That's easy to do on Facebook, but tougher on Snapchat or Vine, where only minimal information is available about users. Understanding fan bases is key to ensuring the right influencers are chosen for a certain campaign.
It's also important for keeping pace with other influencer marketing companies, including theAmplify and Naritiv. TheAmplify recently said it opened a video production studio inside its Culver City office in part to experiment with figuring out how to get influencers involved with virtual reality content.
Instabrand also plans to connect with influencers on new forums, keeping an eye on chat app Kik and art book app Steller for instance. Randall Cox, president of media company Relativity Digital, and Brian Norgard, Tinder's vice president of advertising products, have joined Instabrand as advisors.
TI Capital, which is funded by a Santa Monica family, led the investment round. Chief Investment Officer Velios Kodomichalos said that, ultimately, influencer marketing operations may be absorbed into advertising or talent-management companies, but there's plenty of money to be made and work to do until then.
"As marketing dollars become more valuable and companies want greater return on their dollars, they can get them from influencers as opposed to traditional advertising," he said.