In the two years since Facebook's huge image-sharing platform sold its first ad, Instagram has focused on fixed-price advertising from big national brands. In keeping with the platform's emphasis on aesthetics and high design, many early advertisers were lifestyle companies like Starbucks and Disney.
With Instagram's 300 million global users now accustomed to seeing ads, Facebook is cranking up the yield. Beginning in July and accelerating this month, the platform has begun supporting self-serve and API access for large and small marketers. And it has added other performance-driven ad features such as first- and third-party data matching, app install ads and links to outside websites. (Read the blog post.)
Equally significant, Instagram ads are now available to a much larger geographic swath of ad buyers than they were previously. Marketers in 30 countries including Italy, Spain, Mexico and Brazil can now buy Instagram media. And by the end of the month, all global advertisers will be able to do so.
All of this new demand will compete in an internal auction hosted on the Facebook platform. In a very real sense, the vast Instagram supply – reaching an audience as big as Twitter's – has gone programmatic.
Marcus Pratt, VP of insights and technology at Mediasmith, said the expansion will instantly appeal to advertisers and agencies, which can now reach targeted Instagram audiences in a way that's served, optimized and measured alongside their Facebook mobile ad investments.
"Any advertiser finding success with Facebook’s mobile news feed or video ads will see Instagram as a natural extension, with the ability to increase scale while applying Facebook’s world-class targeting," he said.
Building hooks into today's programmatic demand ecosystem is challenging for social platforms like Pinterest, Snapchat and Yahoo's Tumblr, which are in various stages of integration. Instagram is lucky because it shares a sales and infrastructure back end with Facebook, so its new capabilities come "ready baked." Those capabilities include Facebook's marketing partner network (for API access), its tie-ins to demand-side platforms, its Power Editor tools (for self-serve access geared to SMBs) and its data integrations with a range of third parties.
"From a Facebook marketing partner's point of view it's the same API," said Jim Squires, director of market operations (aka Instagram's guy in charge of monetization).
Squires is a longtime Facebook exec who previously oversaw the introduction of ads into the Facebook mobile news feed. He said the introduction of performance-driven ad formats has been a natural next step for Instagram's front-end experience, since users have asked for ways to learn more about products and services they see in Instagram ads.
"What is now available is not only the ability to inspire but also take people through that journey from inspiration all the way through to downloading the app or whatever action you want people to take," he said. "My view is that in the central platform, for people and advertisers, all kinds of objectives are a must-have. Business and community value can coexist."
He said approximately 10 Facebook and Instagram marketing partners have been using the expanded API for the past two months. This week it becomes available to all partners.
So, what do marketers and API partners need to know about the audience and advertising opportunity on Instagram, in contrast to Facebook?
"Instagram is very much about people's passions. Facebook is very much about discovery and viewing the world through the lens of friends and family," said Squires. "We want to make sure the ads people see are things that matter to them."
The new targeting options do not mean the end of direct sales on Instagram. A new format called Marquee is the only item on the Instagram ad menu that is negotiated as a guaranteed placement and is intended to reach broad audiences (such as all US users).
And Instagram is rolling out some other high-impact creative tools too, including video ads up to 30 seconds long and a "landscape" aspect ratio to make images pop.
At least one early study of performance-driven advertising on Instagram suggests a strong upside for marketers. Mobile attribution company Adjust looked at the performance of Instagram install campaigns for 106 clients, mostly in the lifestyle category. It found Instagram users spend significantly more time in apps after installing them, and use those apps up to 15% more often compared to users acquired through other channels.