Brief:

• Amazon is paying publishers and social media influencers to post content on Spark, the e-commerce giant's new shopping-oriented social network, The Wall Street Journal reported. Smartphone users can access the service on Amazon's existing mobile apps and buy products that appear in a customized newsfeed.
• The platform urges people to post stories, ideas and images of products they like, and to get reactions from friends and followers. Users can tag products mentioned in their posts if they are available for sale on Amazon.
• Spark, which WSJ described as a cross between Instagram and social bookmarking site Pinterest, debuted earlier this week with prearranged content from publishers and social media influencers paid by Amazon to help generate posts. Amazon doesn't pay publishers a commission on products they may help to sell, and instead shells out a flat fee for a set number of posts.

Insight:

By embracing publishers and social influencers early in the development of Spark, Amazon recognizes how other services like Facebook, Instagram, Twitter and YouTube form communities around influencers' personalities and specialized content. The social influencer industry has exploded as consumers, particularly millennials who are cutting the cord with traditional media, seek the advice and opinions of people who demonstrate or endorse products online. Social marketing revenues were estimated to be $570 million on Instagram alone last year, according to eMarketer, and the industry as a whole is estimated to double to roughly $2.4 billion by 2019, per marketing firm Mediakix. It's unclear whether Amazon will become a threat to other social media companies.

Social media companies depend on advertising sales, and while Amazon has a growing ad business, the company ultimately aims to sell products. Amazon Spark will likely only bring value to the company if it's leveraged as an accessory toward driving transactions. The biggest risk is that people may perceive Spark as a cynical way to sell products and not bother to look at it. Anyone who wants to post to Spark as an "Enthusiast" must pay the annual subscription fee for Amazon Prime, which has 80 million subscribers. Meanwhile, intermingling editorial content with endorsements has spurred ethical concerns. The Federal Trade Commission in April said it warned social media influencers that they needed to provide better disclosures about promoting or endorsing products on social media.

Amazon has an affiliate program called "Amazon Associates" that pays a commission to websites for driving customers to its online store. The program generates solid sales for online publishers that link to Amazon products in their content, per WSJ. That may signal that Amazon is considering switching to a commission-based model that provides incentives to publishers to post to Spark.