The announcement comes amid discussion that the Facebook-owned platform is set to become the world’s mobile advertising platform by 2017, and that discussion has already got some big brands thinking hard about how they can start getting their messages in the feed of users before their competitors get in on the act.
What has changed?
Previously, sponsored content on Instagram was something of an exclusive members club. With Facebook tentatively rolling our sponsored content as a concept, advertising was reserved for those brands that could stump up a minimum of $50,000 for a campaign. That, however, has all changed.
Last week, Instagram officially switched on its advertising API, which will allow advertisers to schedule advertising campaigns through third party platforms, such as Salesforce or Brand Networks.
It means that more marketers can now, for the first time, start buying Instagram ads and planning their Instagram marketing in a more automated fashion, alongside their other digital ad buys on Facebook or Twitter.
So what will advertisers get for their ad spend?
The advertising model will bring Facebook and Instagram closer together, particularly when it comes to helping advertisers target their audiences. Facebook will be providing Instagram with targeting capabilities that would have otherwise taken Instagram years to develop.
When Instagram announced that it was testing its API back in June, it confirmed that all of Facebook's ad-targeting tools will be opened up to Instagram advertisers. That’s a huge selling-point for Instagram, although its effectiveness will rely on how willing users are to connect their Instagram and Facebook accounts together. Instagram has also recently launched "Shop Now" buttons and other messages for advertisers to link outside the app, providing clear calls to action.
But some people are going to have to wait their turn
The API will open up Instagram advertising for some, but not for all.
The announcement will open up ads to any brand that currently uses one of Instagram’s approved partner platforms; namely Kenshoo, Brand Networks, Salesforce Marketing Cloud, Unified, SocialCode, 4C, Nanigans, and Ampush. If you’re not using one of those platforms, you’re going to have to wait your turn.
You will, eventually, be able to run sponsored content campaigns via Facebook’s ad interface, but that functionality isn’t expected to roll out until Q4 of 2015.
Instagram advertising is going to be big
The significance of this announcement is not to be underestimated. Brand Networks CEO Jamie Tedford, described this as “one of the most anticipated launches we've ever seen” for his customers, and there is good reason for that.
In late July, a report was released by eMarketer that Instagram is set to earn worldwide mobile revenues of more than $2.8bn by 2017. That figure would see it earning more than both Google and Twitter for mobile ad revenue – a significant milestone.
Instagram’s current mobile revenues for 2014 stood at $595m and, if the new forecasts are accurate, it will see Instagram account for 10% of all Facebook global ad revenue. The forecasts also suggest that whilst the US currently accounts for 95% of Instagram ad revenue, this will drop to 85% by 2017, as advertising rolls out to new markets.
For Facebook, Instagram provides a vehicle for it to profit from offering brands access to audiences that have failed to remain engaged with Facebook. Instagram’s audience tends to be much younger and yet, it still performs well on key engagement metrics – including loyal audiences and long dwell times.
But of course, much of these forecasts rely on Instagram overcoming a number of challenges. It lacks the scale of Facebook (its audience is five times smaller) and brands will have to think carefully about specific creative for Instagram. Simply duplicating social content across multiple platforms isn’t going to be effective here.