What Retailers Need to Know About Instagram’s New Ad Business

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What Retailers Need to Know About Instagram’s New Ad Business

Over the past couple years brands and startups have tried endlessly to ‘hack’ Instagram and make it shoppable. Efforts were admirable, and in some cases worthy of the circumstances – Like2Buy anyone? Yet there was only so much that could be done since Instagram only allowed one linkable spot and it was on the profile page.

Well last week Instagram finally provided some relief with the official announcement of new direct response objectives and their advertising platform.

Instagram’s new ad business will include an API, new ad formats with clickable buttons and call-to-actions like “Shop Now,” and “Install Now,” and Facebook powered targeting. (Yep, we’re excited about that last part too.)

Instagram’s Advertising Evolution

Instagram has taken painstaking efforts to maintain the integrity of their photo-sharing app with its users. It first launched a limited advertising business in November 2013 with select brands looking to achieve branding objectives, and CEO Kevin Systrom approved every ad.

This move into a full-scale advertising offering comes with a move into direct response centered ad products, a phased rollout that includes API partners, and eventual ad buying capabilities through Facebook’s Power Editor.

The benefit of having Facebook as its parent company is enormous and obvious. Facebook has gone through the growing pains of launching and scaling an advertising business, and can lend their technology, expertise, and first-class targeting capabilities to Instagram.

Powered by Facebook

Syncing Instagram’s audience with Facebook-like tools and user data will give Instagram instant validation with retailers and brands. Currently, Instagram allows advertisers to target users by age, location, and gender. In the coming year advertisers can expect to find expanded targeting with demographics and interests, and the ability to use first-party data. (Sounds a lot like Custom Audiences.)

To make things even more interesting is the potential opportunity to start a dialogue with users on Instagram and continue the conversation on Facebook, by specifically targeting people who saw your Instagram ad. No word on if Instagram will actually go down this route, but it is certainly compelling.

Experienced retailers and e-commerce companies know that converting and measuring clicks that turn into sales on mobile can be a big challenge. Mobile experiences are still clunky and ease of purchase still has a ways to go for many brands.

When you’re measuring for return-on-ad-spend (ROAS), mobile just doesn’t compare with desktop and tablet. So the ability to reach untapped audiences on Instagram and facilitate purchases via Facebook can be massive.

Ready. Set. Wait.

So when can retailers, who’ve been clamoring for the opportunity to expand reach and push direct response objectives, get started? Well you’ll have to be a little more patient – especially if you’re not working with certain Facebook Marketing Partners. Here’s a look at the timeline Instagram is working on:

  • June 2015: Begin testing direct-response ad formats
  • August 2015: Open ad buying through select Facebook Marketing Partners
  • Fall 2015: Expand ad buying globally and to all advertisers

You can expect Instagram to be slow and deliberate as they expand into direct response advertising. Instagram is a completely different beast than Facebook, and they’ll take great care to ensure users aren’t turned away.

Article Updates:

  • 7/23/2015: Timeline updated to reflect new information made available on ad platform release.
  • 8/04/2015: Timeline updated to reflect API Partner activation