Is 2015 Instagram Year?


On 9th of September 2015 Instagram has introduced its worldwide Advertising service to the public. The service is available to all companies ranging from small to large ones. The Advertising service has been in testing phase for the past 2 years.

instagram

The Advertisement service works as self-service platform and any company can create the advertisement using the Facebook’s selve-serve platform, Power Editor or easily though Instagram’s Ads API system which is a software, that helps the advertisements to be automatically created (Business.instagram.com, 2015).

Instagram offers easy to follow manual with tips how to create the content which will fit the platform and make users love it rather than hate it. The Ads work on the same Ad Auction system same as Facebook, which selects the best suitable Ads based on the maximum bids and Ad performance. Since Facebook is a parent company of Instagram, Instagram also has access to targeting tools which Facebook already has in use, which helps Instagram since a lot of capital is saved and marketers know what quality of targeting to expect. The short time span within which Instagram managed to enter the Online Ad market was this fast mostly to the boost which it gained from Facebook (Sloane, 2015).

The main 3 types of new advertisement on Instagram Image Ads, Video Ads (30 seconds) and Carousel Ads consisting of multiple pictures. The types of advertising are shown in the picture below (Constine, 2015).

Screen Shot 2015-09-29 at 11.11.28

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 and then global, that gives you a sense of the broadening of availability.” said James Quarles, Instagram’s global head of business and brand development (Boorstin, 2015).

According to eMarketer research, Instagram will generate almost $600 million in ad sales this year 2015. It also predicts that Instagram will earn $2.81 billion in ad sales by 2017, which would make them overrun Google and Twitter in U.S. display ads (Sloane, 2015).

Screen Shot 2015-09-29 at 11.17.02

Secondly on 22nd of September 2015 Instagram has reached 400 million users. The increase from 300 million to 400 million happened only within 9 months. Instagram is at the moment having more users then Twitter, which has lastly reported 316 million users (Olanoff, 2015).

instagram-30m-chart1

Instagram offers a guide in which the companies can customise their advertisement in a way that they blend with the rest of users content and user is not disturb by the sponsored posts. When Instagram first introduced the sponsored images, there was a clear disagreement from the users who didn’t welcome posts from brands they weren’t following (Sloane, 2015).

The increase of numbers of users clearly shows that people did not start leaving the platform after the Instagram Ads have been introduced as the first waves of reactions were hinting.

Do you think that the fact that Instagram will overrun Google in advertising revenue is feasible in the near future? Further do you think that this is the right way which Instagram should lead themselves and following and implementing what Facebook is doing or will it lead to customer loss?

Author: Natalie Jonasova

References:

Boorstin, J. (2015). Finally! Here comes Instagram’s big ad push. [online] CNBC. Available at: http://www.cnbc.com/2015/09/08/finally-here-comes-instagrams-big-ad-push.html [Accessed 27 Sep. 2015].

Business.instagram.com, (2015). Instagram Business. [online] Available at: https://business.instagram.com/advertising/ [Accessed 28 Sep. 2015].

Constine, J. (2015). Instagram Ads Go Global, Including New 30-Second Commercials. [online] TechCrunch. Available at: http://techcrunch.com/2015/09/08/all-grown-up-and-ready-to-make-money/#.ziat7a:e8eu [Accessed 26 Sep. 2015].

Olanoff, D. (2015). Instagram Hits 400M Users Just 9 Months After Announcing 300M. [online] TechCrunch. Available at: http://techcrunch.com/2015/09/22/instagram-hits-400m-users-just-nine-months-after-announcing-300m/ [Accessed 28 Sep. 2015].

Sloane, G. (2015). Instagram Unleashes a Fully Operational Ad Business. [online] AdWeek. Available at: http://www.adweek.com/news/technology/instagram-just-unleashed-fully-operational-ad-business-165117 [Accessed 27 Sep. 2015].

Sloane, G. (2015). Instagram’s Ad Sales Are Expected to Top $2 Billion by 2017. [online] AdWeek. Available at: http://www.adweek.com/news/technology/instagrams-ad-sales-are-projected-more-2-billion-2017-166111 [Accessed 27 Sep. 2015].

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2 responses to “Is 2015 Instagram Year?”

  1. 366867ms says :

    Hi Natalie,

    First of all I like your insights and thoughts on the very accurate topic!

    I think it is an interesting coincidence that Instagram has reached a premium number of users and introduces an advertising tool at the same time. The sponsored advertisements started showing on my Instagram feed somewhere 2 weeks ago and I already see more and more sponsored advertisements show on my Instagram every day.

    Answering the question whether Instagram will overtake Google in advertising revenues, I am not sure that this will actually happen.
    According to The Wall Street Journal 98% of the users access Instagram via mobile devices. Furthermore, there is lack of AdBlock apps for mobile devices to be installed on the mobile devices compared to desktops. One of the first AdBlock apps has just been released, named Been Choice and it is only able to block ads on Facebook. Taking the above information into consideration, theoretically Instagram could overrun Google in revenues in advertising, since people cannot block advertisements on their mobile devices and especially cannot block Instagram ads.
    Google could be further defeated if the advertising revenues of Instagram merge with the mother company Facebook. Currently, Facebook has a sufficient share within the online marketing revenue. Taking into account that Facebook has acquired a lot of tech companies in the past and will continue to acquire start-ups, Facebook’s share in online ad revenue will further increase. According to a study by eMarketeer, their share will grow to 33% in the US market overruling Google.

    You estimate that number of users on Instagram has increased even after the advertising being introduced. This is indeed a true fact. However, I think that the number of users will decrease, due to the fact that most of the users joined Instagram for the core value of Instagram, which is the enjoyment of sharing pictures and not to be targeted and disturbed with advertisement.

    Best,
    Milou

    References:

    http://uk.businessinsider.com/been-choice-mobile-ad-blocker-blocks-facebook-ads-2015-10?r=US&IR=T

    http://blogs.wsj.com/digits/2014/04/03/data-point-social-networking-is-moving-on-from-the-desktop/?mg=blogs-wsj&url=http%253A%252F%252Fblogs.wsj.com%252Fdigits%252F2014%252F04%252F03%252Fdata-point-social-networking-is-moving-on-from-the-desktop&utm_content=buffer86633&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

    http://www.emarketer.com/Article/Facebook-Twitter-Will-Take-33-Share-of-US-Digital-Display-Market-by-2017/1012274

  2. nikkibuenodemesquita says :

    Hi Natalie,

    Thank you for your contribution, I would like share my view on the question you raised whether Instagram should implement what Facebook is doing.

    I think that we can see nowadays that the kind of social Media solution Instagram is offering is booming (23% growth). What also makes Instagram so attractive for advertisers, is that they can exactly see what kind of affinities or interests the targeted popularity possesses even more than Facebook can. Liking brands/affinity pages is less popular on Facebook than it is on Instagram, causing Instagram advertisers to more accurately reach the target group they are aiming for. This will make the advertisements less annoying to the users as they should be useful to them. To conclude, I think that the Instagram adds will be less harmful then the Facebook adds as we know them.

    Nikki Bueno de Mesquita
    356897

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