Instagram's Clutter-Free Environment Inviting for Advertisers (But It Won't Last)

Social network's digital advertising offering is scoring the big bucks, but the writing is on the wall

Instagram still has some of that feeling and excitement of a young Facebook. Before the clutter arrived and maybe even before your parents and grandparents joined.

Ads are still an uncommon sighting in users' feeds, but the writing is already on the wall. The world's largest advertising conglomerates are making nine-figure deals with Instagram and its parent company Facebook to get an inside track on the action. Meanwhile, full-service agencies with targeting mechanisms, analytics and creative chops specific to Instagram are growing across the country.

Even without a fully baked advertising platform, Instagram is supporting an industry with massive potential. Just follow the money.

That's a Lot of Zeros

Instagram struck its first major advertising deal with an agency in March, securing a US$100 million commitment from Omnicom. Two months later and just weeks after its $35 billion merger with Omnicom fell apart, Publicis Groupe inked a deal valued around $500 million with Facebook and Instagram.

Now may be the best time ever for marketers to use Instagram, but brands should be preparing for a sprint instead of a marathon, according to a report penned by Forrester Vice President and Principal Analyst Nate Elliott. The top brands studied by Forrester generated a per-follower engagement rate that's 58 times higher than Facebook posts and 120 times higher than tweets.

"As users and marketers flock to Instagram, clutter will increase and Instagram will likely begin filtering out brands' posts in the name of relevance. Marketers must use Instagram now, before it changes the rules -- and they must be ready to move on to another social site when Instagram's phenomenal engagement rates disappear," Elliott writes in the report aptly titled " Use Instagram Now."

Here's why brand's see greater success on Instagram: It attracts fewer people and marketers than Facebook and Twitter, it doesn't algorithmically or otherwise filter out brands' or users' posts, and the median age for an Instagram user is 27 compared to Facebook's median age of 40.

Related: News Corp sees Instagram as a threat
The first Instagram ads launch, courtesy of Michael Kors
Instagram reveals look and feel of advertising

How Long Before Organic Reach Declines?

"Instagram's active user base has doubled in the past 13 months and we believe that more brands will soon pursue this audience," Elliott writes. "Instagram's days as a blissfully clutter-free environment are numbered." Marketers stand to lose much of the organic reach they enjoy today, similar to what's played out on Facebook over time.

"Instagram's struggle to introduce ads is a problem for brands," Elliott adds. "Instagram's two tests of paid advertising have met significant resistance -- and that's not just bad news for brands hoping to buy ads. If Instagram's users don't accept ads from brands they haven't followed, the site will have only one ready-made revenue stream: Convincing brands to promote posts to their existing followers. That could motivate Instagram to more aggressively reduce brands' organic reach."

Third-party developers and agencies are leveraging the first version of Instagram's API to make the most of the opportunity today, but also prepare for a more complex future. Ernie Capobianco, CEO of Sq1, tells he expects Instagram to start getting more technically savvy by opening up different ad placements, working with more agencies and further developing its targeting capabilities.

Facebook enables advertisers to target audiences directly at the point of purchase, but Instagram hasn't made that leap yet nor has it introduced CRM integration or the pricing models enjoyed by other more established platforms. "It's a painful process to run those Instagram campaigns," says Capobianco.

Make Way for Programmatic

He expects that to change when Instagram gets even cozier with Facebook to offer combined targeting options, workflow and reporting. "There's a lot of really cool advanced targeting strategies we're able to do in Facebook, hopefully we're able to do that soon enough in the other platforms," Capobianco says.

Despite those limitations, theAmplify was able to break cash-flow positive just six weeks after it launched late last year to focus exclusively on Instagram influencer marketing, according to CEO and founder Justin Rezvani. The Culver City, Calif.-based startup has developed an algorithm called "SharedRank" that taps into Instagram's API to measure against 1,000 data points and enable brands to target 16 specific affinities of individuals.

"The important thing for marketers are not the influencers themselves. The important thing for marketers are the audiences that reach those particular influencers," says Rezvani. He also believes Instagram will eventually embrace programmatic buying and deeper targeting opportunities through audience segmentation, but for now it makes sense that process would be less technical on Instagram.

"The focus in here is creative and creating beautiful content and experiences on Instagram," Rezvani says. "If you just put too many ads on this platform it's going to be really difficult to engage. You have to remember everything on Instagram is 100 percent share of voice and everything takes up 100 percent of the screen at a certain time. So an ad unit on Instagram is way more impactful than any type of platform. On Facebook you'll look at four or five ads with one screen, this you're only looking at one at a time."

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

People in vegan houses shouldn't throw bacon

Picture this. You’re at a Gourmerican burger joint chomping a cheeseburger, when an outspoken vegan friend starts preaching that you’re killing the planet. Last week, that same vegan downed a pricey glass of pinot before their flight to a far-flung destination, armed with their strongest mossie repellant and first aid kit. Anything amiss?

Abbie Love

Strategist, Ikon Communications

The role of the CMO is evolving: Are you keeping up?

My (amazing) vacation in the Galapagos Islands earlier in the year got me thinking about Charles Darwin and his theory of evolution. What does this have to do with the role of today’s CMO, you ask? Plenty.

Sheryl Pattek

Vice-president, executive partner

Getting your business ready for the Entrepreneurial Consumer

We all know the digital revolution has completely transformed the way consumers are interacting with brands, and that a lot of businesses are finding it hard to catch up. One way to closing this brand gap is to understand consumer behaviour and build a brand experience that meets these new needs.

Pip Stocks

CEO and founder, BrandHook

Or just go to sites like www.shopsthatshiptoaustralia.c... and others and be sure that the stores will send to where you live :-)


Why online shopping is like dating – RedBalloon CEO

Read more

Personalisation is the key. Customers demand a very relatable and well defined CX where the sincerity and understanding of their disposit...

Hitesh Parekh

In pictures: Improving cutomer experiences through smart personalisation

Read more

Thanks for this. The key for me is the effective of governance where it dictates and sets the proactive policy when it comes to CX. Tech ...

Hitesh Parekh

6 lessons in modern marketing from a customer experience chief

Read more

Very well said “With today’s consumers more demanding of the brands and merchants they shop, it’s imperative for merchants to not just co...


CMO's top 10 martech stories for this week - 29 September

Read more

Very interesting article which touches on the importance of a feedback loop fuelled by customer and market insights. Ideally this scenari...

Andrew Reid

Building customer insights in the data and digital age

Read more

Latest Podcast

More podcasts

Sign in