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Ads come to Instagram

The photo sharing social network will no longer solely be a publicity tool, but companies will actually be able to drive traffic, and more importantly sales, from their posts.

Instagram tested the advertising waters earlier this year by opening up the service to a select few companies, such as Netflix, Victoria’s Secret and Old Navy, as it peppered users’ feeds with a few sponsored posts.

But from 30 September, any company from 30 countries will be able to post adverts to be seen by Instagram’s 300 million monthly active users.

The Facebook advertising formula

Facebook, who bought Instagram back in 2012 for $1billion, have mastered the art of monetising social through advertising, making $3.83 billion last quarter according to CNBC. So, as they say, if it ain’t broke don’t fix it: Facebook is integrating Instagram’s advert buying process with it’s own current “self-serve” application, Power Editor, but Instagram will also have its own API.

The fact that Facebook is integrating the Facebook and Instagram advertising process is great news for marketers, who can plan campaigns across both platforms, using shared data on followers and likes to allow highly targeted campaigns. 

Instagram’s business operations director Amy Cole told The Drum: “Being able to use the same tools across both platforms, having some creative portability and reaching a wider audience across both platforms is incredibly powerful from the advertiser perspective.

“We’re seeing Facebook and Instagram emerge as meaningful platforms to drive different media objectives,” she said.

Instagram are expecting big things from its new advertising model, looking to reach the same heights as its parent company.

James Quarles, Instagram's global head of business and brand development told CNBC: "There are 2 million advertisers on Facebook today—that's the size and scale we're looking at. Plus expanding from eight markets to 30, that gives you a sense of the broadening of availability."

And these high expectations are not unrealistic. According to Fortune, Kenshoo, a marketing software company, predicts the social network could make up to $1 billion in annual revenue in the next three to four years. 

Instagram Adverts

As with Facebook, Instagram wants to keep adverts as integrated with regular posts as possible as to not put users off. They will appear as normal photos, but with an additional call to action button and a ‘Sponsored’ disclaimer.

Marquee ads will also be an option. These will be done on insertion and a CPM basis. Companies will be able to pay to “own a moment” and give their ad a boost to appear at a certain time. This is likely to be taken up by retailers doing flash sales or media companies who are doing a push for film and music releases. 

Instagram has also lengthened its maximum video duration from 15 seconds to 30 seconds. This feature, for now, is for advertisers only so they can get their message across. Everyday users will still have to make do with 15-second clips for the time being.

After trialling various different Call To Action (CTA) buttons on its initial advertising run, call to actions will include ‘Shop Now’, ‘Install Now’, ‘Sign Up’ and ‘Learn More’ – something for everyone depending on what product you are pedalling. 

Now the challenge will be to get users to click on these CTAs, as at present 97.2% of post engagement of Instagram is liking photos by clicking the heart icon or double tapping photos. 

If the initial run of adverts earlier this year was anything to go by though, companies should see responses from their ads. CNBC reported that Facebook’s ad recall from sponsored posts on Instagram was 2.8 times higher than Nielsen's norms for online advertising, according to a study of 400 campaigns. 

Who should take advantage?

Advertising on Instagram is a massive opportunity for the B2C market, especially those in retail. 20% of the internet uses Instagram and has 75 million daily users, all with their data already stored up from Instagram activity, Facebook data and third party app interactions, there is a large highly targetable market ready for the taking.

There is fantastic potential for the fashion and beauty industry. Out of the top 50 hashtags used on Instagram, six are relevant to this market:  #fashion, #style, #hair, #makeup, #eyes, #shoes.

If companies can cleverly stylise their ads so that they slot nicely in between Kim Kardashian selfies and food and fitness bloggers that rule the network, there is no reason why the adverts can’t work for the smaller companies as well as making money for Instagram itself, as it should become an affordable and high-return advertising method.

As Fortune highlights, “So far, pricing on Instagram has been relatively high, averaging a cost-per-thousand views, or CPM, of $6.70, according to Kenshoo. That’s likely to fall as more advertisers come onto the system, according to Zvika Goldstein, vice president for product management at Kenshoo.”

Three and a half years since purchasing Instagram, after biding its time and growing the platform, Facebook is now ready to make some money off the photo-sharing platform. It surely won’t be long before it becomes part of most company’s paid social strategy.

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