Instagram: The new king of mobile display advertising?

Alex Dixie in Advertising

in Advertising

Instagram has officially launched its new advertising API, allowing third parties to directly connect to the Instagram platform and trade advertising programmatically. This new approach is a major change from the previous approach Instagram had to advertising which still heavily relied upon the low-tech solution of requiring each advertiser to purchase directly via an Instagram sales representative. This involved significant time and money – limiting these purchases to those brands with sufficiently large budgets to justify the investment.

Providing advertisers with direct API access to the Instagram advertising platform is potentially a game changer. Advertisers can now use Instagram as an inventory source within their campaigns in a frictionless manner; making the decision to use a portion of their budgets for Instagram a very easy one.

An additional benefit to advertisers of this direct access is that advertisers can now bring the full weight of their technology stack to bear upon Instagram’s users, allowing for their suite of targeting abilities to be used to deliver relevant ads and for their impact to be accurately tracked and analysed.

With it also uniquely being able to offer its parent company’s (Facebook’s) user profiling power (such as the popular Custom Audiences tool), Instagram looks to be set to become an advertising powerhouse – particularly with those advertisers looking for new channels to target notoriously difficult-to-engage millennials.

Instagram’s Golden PotentialInstagram, Google and Twitter Net US Mobile Display Ad Revenues, 2015-2017 (billions)

Until 2014, Instagram’s advertising platform was non-existent. However, US users started seeing adverts at the beginning of the year and the full-scale international roll-out was announced in June. At the same time, Instagram announced a strategic partnership with Omnicom which could be worth in excess of $100m. Suddenly Instagram was a major player in an extremely lucrative market.

With the launch of the direct advertising API, Instagram has instantly opened even more doors. eMarketer predicts that Instagram’s ad revenues will reach $595m this year, exceed $1.2bn in 2016 and reach $2.4bn in 2017 – surpassing both Google and Twitter for display advertising.

User Reaction

Social platforms are understandably nervous when making a large scale change such as introducing advertising to a previously ad-free environment. How will established users react? Will user growth slow? For Instagram any fears there may have been appear to have been unfounded – yes there has been elements of discontent in some areas of the network but generally it has been positively received. In fact, Instagram added 50 million users in the first six months following its introduction of advertising and it now boasts over 300 million active monthly users – more than Twitter.

The attitude of users so far seems to be positive – the adverts themselves are unobtrusive and do not interrupt the Instagram experience in a jarring way. Given the fact that, far from negativity, adverts have actually been attracting thousands of likes from users, it seems as if Instagram has got it right. Brands are overwhelmingly positive as to the success of their campaigns to date – Instagram advertising seemingly provides them with a direct channel to engage their supporters and brand champions without becoming an annoyance.

Interestingly, Instagram are also providing users with a direct method for giving negative feedback on advertising they view. Clicking “Hide This” on an advert provides a prompt to select whether it is the advert itself they do not wish to see (i.e. that creative has not been successful or has been delivered too frequently) or the account generally (i.e. the user is just not interested in the brand itself). Instagram has promised that any user feedback received via these channels will be used to better refine advertising on the platform. Exactly how this refinement will occur remains to be seen but is likely to become increasingly important as the direct API allows a greater number of advertisers to deliver creatives to users without any form of filter being applied by Instagram itself.

King of mobile?

One particularly unique aspect of Instagram’s advertising offering is that it is mobile-only. Traditional advertising platforms have struggled to adapt to the constraints present in a mobile environment – none more so than Facebook. Although now making a concerted effort in this space, its initial mobile advertising offering was non-existent. However, Instagram represents  a new approach – an advertising platform designed from the ground up with mobile at the forefront. Desktop is not even a second-thought; it simply does not feature. This allows sharp focus to be maintained on mobile and to ensure that its focus is on (and its advertising R&D dollars are flowing solely into) its unique ecosystem which few other advertisers can offer – allowing Instagram to keep innovating to stay ahead of the curve.

As the next generations experience digital life increasingly through a mobile device rather than a traditional desktop, platforms such as Instagram become increasingly vital to advertisers as they look to engage these new consumers; an audience which are inaccessible through traditional channels. To see more on the mobile advertising challenge see our previous article looking at the challenges of monetising mobile users.

With an already successful mobile-only advertising offering now being augmented with ease of access for advertisers, Instagram looks to have everything in place to become king of the mobile display world.

Instagram: The new king of mobile display advertising? was last modified: August 6th, 2015 by Alex Dixie