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Instagram will soon carry a lot more advertising. Direct-response buttons, an API for ad buying and Facebook-style targeting capabilities will give advertisers new ways to buy and will lead to rapid increases in ad spending on the photo-focused social network. eMarketer forecasts Instagram will have nearly $600 million in ad revenues this year, rising to $2.81 billion in 2017, according to a new eMarketer report, “Instagram Advertising: What Marketers Need to Know.”
Marketers’ interest in Instagram has been fueled by studies showing high engagement with both organic marketing and paid ads. But it is not certain that that will continue when more marketers and their ads enter the system.
On the organic side, one factor that has led to high brand engagement is that Instagram users have the potential to see every post from accounts they follow (provided they log in regularly). This automatically leads to higher engagement. In contrast, Facebook’s algorithm reduces the likelihood of people seeing brands’ organic posts.
For example, home furnishings retailer Dot & Bo sees similar numbers of “likes” on its organic posts on Instagram and Facebook, even though it has only 8,800 followers on Instagram vs. 620,000 on Facebook, said Allyson Campa, the company’s vice president of marketing. Similarly, a Mini USA spokesperson told eMarketer in June 2015 that more than 20% of the automaker’s followers on Instagram typically see posts from the brand—far better performance than it sees on Facebook.
Shareablee, a social analytics company, found that consumer actions (such as favorites and comments) for US brand pages on Instagram more than doubled year over year in Q1 2015. By comparison, actions increased 32% on Twitter and 27% on Facebook.
“Organic engagement on a given Instagram post is leaps and bounds above its counterpart on Facebook, on Twitter, on Pinterest, on any of them,” said Victor Pineiro, vice president of social media at digital agency Big Spaceship. “The reasons you’ll get numbers that are so high is that you see every piece of content that you’re subscribed to, and it’s really easy to tap once to ‘like’” something.
In addition to showing strong organic engagement, ad engagement has also proven high, at least according to several case studies published by Instagram. In a June 2015 blog post, Instagram cited several examples of advertisers in Canada achieving brand lift of 14 to 45 points.
“If you think about ad recall on the platform, it’s nearly three times what you would see across the industry, generally speaking,” said Jim Squires, Instagram’s director of market operations.
Whether those sorts of metrics stay high will depend on how the company handles the ad rollout and how marketers craft their pitches. Thus far, Instagram’s slow and careful approach has cultivated a positive experience for both brands and users. The introduction of a lot more advertising, especially ads that seem out of place in the Instagram environment, could irritate users and lead to usage declines.
eMarketer corporate subscription clients can view the full report here.
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