POV: Instagram Ramps Up Its Advertising Offer
Mindshare Point of View:
After sticking its toe in the water by launching ads a year and a half ago, Instagram is now jumping in with both feet as it looks to further monetize its footprint. With over 300 million active monthly users, Instagram’s initial limited foray into advertising hasn’t slowed down its popularity with users. Instagram continues to show robust international growth, and according to Pew is the fourth largest social network in the US, sandwiched in between third-place Pinterest and fifth place Twitter.
Details and Implications
Instagram announced three key enhancements to its advertising program:
• Call to Actions: Similar to Google and Facebook, Instagram is now offering advertisers the ability to layer in additional functionality that enables people to take a direct action within the ad unit. For example, people can sign up to learn more, purchase the product, or download an app. The addition of such CTA functionality has exploded over the last year as advertisers attempt to demonstrate a direct correlation to an ad impression with an actual result, ideally aligned against the brand’s specific KPI’s. Such efforts to help advertisers achieve that “last digital mile” should be applauded. However, advertisers need to ensure they don’t slip into a “last button wins” mode that gives full credit to the action to the last ad impression rather than recognizing the contribution other ad impressions may have made up that point. Comprehensive attribution modeling will be more important than ever.
• Targeting: Instagram is cleverly leveraging the vast amount of data captured across Facebook’s massive app portfolio to enable better targeting against specific demographics and interests as well as information you have about your own customers (e.g., Facebook Audiences). Such rich targeting is immensely appealing to advertisers, particularly when you consider that Facebook now has four major applications on most smartphones (Facebook, Instagram, WhatsApp, Messenger), no small accomplishment given the average consumer has downloaded only 42 apps and uses only eight on a regular basis – in many cases Facebook owns four of those eight apps.
• Buying: Facebook is basically making it simpler to buy, manage, and measure ads on Instagram by making its ads available through an Instagram Ads API and Facebook ad buying interfaces, including Power Editor and Ads Manager. Not revolutionary but a smart practical step in just making it easier to do business with them.
Instagram founder Kevin Systrom has clearly eliminated any doubts over advertising and its potential impact on the Instagram user experience. Meanwhile Facebook continues its unrelenting efforts to own the mobile space, perhaps with a close eye on the developing partnership between Google and Twitter, which could led to an acquisition of the later by the former, which would give both companies a much needed boost in the mobile space. Or perhaps Facebook is looking at growing threats from the East, where the big Chinese players are looking at international expansion; Alibaba have just ploughed $200m into Snapchat, a growing competitor to and long-time acquisition target of Facebook.