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Instagram's Ad-Supported Model: How Can Instagram Succeed?

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Instagram inaugurated its ad-supported model with an ad for a Michael Kors watch that showed up in the feeds of Instagram's users on Nov. 1.

The launch of advertising on Instagram was met with mixed reactions, probably in part because the ad didn't feel contextually relevant to the audience viewing it.

What's not in doubt is that by some measures the effort was an overwhelming success: "18 hours after having been shared, the promoted post had received 217,700 Likes, a 370% increase compared to the 46k the designer brand is used to seeing on average," according to Nitrogram, an Instagram analytics and engagement platform.

In one sense, though, advertising on the mostly mobile social platform is nothing particularly new: As Om Malik points out on Gigaom, "Instagram power accounts—well-known Instagrammers with tens of thousands of followers—are pushing their own form advertising [by] putting hashtags of commercial products" with the images they post.


Here, three online advertising and marketing executives discuss both the first official Instagram Ad as well as Instagram's strategy and what it needs to do to become a successful platform for marketers and advertisers:

  1. Ferdinando Verderi, creative director at creative agency Johannes Leonardo, and head of JLF, the agency's division dedicated to fashion, luxury, and art.
  2. Tony Winders, SVP of marketing for in-screen ad network GumGum.
  3. Fritz Desir, SVP, head of experience planning, at customer experience agency RAPP.

They answer these three questions:

  1. What does Instagram need to do to keep from alienating its loyal fan base as it rolls out advertising?
  2. What can marketers learn from Michael Kors's bold inaugural journey into Instagram advertising?
  3. Is there any value for brands advertising on Instagram if their ads are not targeted?

What does Instagram need to do to keep from alienating its loyal fan base as it rolls out advertising?

Ferdinando Verderi: The Michael Kors ad was the first official advertisement on Instagram, but Instagram itself is a tool whose relevance has always been so tightly related to the idea of self-promotion—of both brands and individuals. As every new platform, Instagram's role is constantly changing and it is hard to predict where its millions of users will take it. Also, as every new tool, its impact is hard to quantify and that typically creates panic in the marketing community, for which budgets need proof of results. That said, early times in any new medium are times in which creativity can rule undisturbed, setting the standards for new ways of thinking.

The great impact new mediums have on advertising is the fact that they have shifted the relationship of control between advertiser and audience. Today, the consumer is ultimately in control. Advertising is no longer imposed on the consumer—the role of ads is more and more one of an invitation, which consumers can accept or decline. It is necessary, therefore, to think of advertisements as a vehicle to add to consumers' lives. As soon as advertising feels like a disturbance, it is dead. When a brand becomes the provider of an unwanted experience, it is a really damaging scenario. The most successful brands form communities of consumers who adore them.

Tony Winders: No platform is better suited to capitalize on native advertising than Instagram. Because ads will be clearly marked as "sponsored" and users have the option to hide them from their feed, they [Instagram] should be largely absolved from any major outcry from users. But unless they address the issue of relevance and context, they may be in for a rude awakening from their loyal fans.

Fritz Desir: Two words: embrace co-creation. A pretty basic step would be to use the co-creation spirit of social to your advantage. It always baffles me why this is so often missed. There should be much more in the ways of notification to users to provide a voice in the experience. As these spaces are, for all intents and purposes, personal, they need to be viewed through a personal lens—and it's critical they be treated that way. Make it fun for people to have a say, and use data to help ensure if you have to make a bet that it's at least a bit more calculated. With Facebook as parent company, there's much that can be gleaned from the various experiences Facebook has had in this area.

That said, with over 230,000 likes [for the Kors ad] and only some roughly 10-15% or so of that number expressing negative comments, I'd be careful not to overestimate the impact. On a platform reaching millions, there are bound to be some reactions that are not positive.

The key is to provide mechanisms at two levels—micro (thumbs up/down, like yes/no) and macro (audience notification, mini-polls, etc.)—allowing users to voice disapproval (or approval) and tailor the experience to their preference. All of this is data that can be extremely useful in discerning preference.

What can marketers learn from Michael Kors' bold inaugural journey into Instagram advertising?

Ferdinando Verderi: Marketing can always learn from real stories—both...what to do and what not to do. The courage of being the "first" has once again been rewarded in terms of the amount of conversation the Michael Kors ad on Instagram has generated. On the other hand, it is worth asking ourselves how is it possible that in a completely new medium the Michael Kors ad on Instagram has been conceived in the exact same way it would have been conceived on a traditional medium. It's a case of reminding ourselves that new media and emerging platforms are only as good as they inspire new expressions.

Tony Winders: The number of likes and new followers for Michael Kors would suggest Instagram advertising works. However, the ad was clearly untargeted and failed to achieve the contextual relevance that is possible with image-based advertising.

Fritz Desir: Hopefully, one thing we don't learn as a takeaway from the Kors/Instagram experiment is to be gun-shy in what marketing is turning into. In social, the only way to learn is through engagement. That said, engagement should be done with research on what resonates from a values perspective for the brand overall and then map that to the platform in question. Being playful and inviting the audience to participate in some way pays dividends. While the Kors foray may have ruffled a few feathers, with over a quarter of a million likes it can hardly be called a failure. What was off here, if anything, had to do more with "context" (the how) than "content" (the what).

Is there any value for brands advertising on Instagram if their ads are not targeted?

Ferdinando Verderi: Instagram is powerful as its content reflects users' interest. It is an intrinsically targeted medium. The best use of Instagram advertisements will be able to leverage this incredible power, not fight it. Understanding the mapping of consumers' interests and passions is a challenging but rewarding effort: It takes a second to click "follow" if something compels us enough to do so. But it doesn't take any longer to click "unfollow" if something disappoints us.

Tony Winders: For broad-based consumer package goods advertisers whose goal is pure tonnage, untargeted ads on Instagram may make perfect sense. But for marketers who want to tell their story and engage a specific audience through images, not to contextualize those placements seems like a missed opportunity to create a strong affinity with the brand.

Just as click-through rates on banner ads are only a proxy for brand performance, the inability to click through from Instagram to a marketer's site does not mean those advertisers won't be able to achieve their desired impact on brand metrics, so long as the ads are contextually relevant to the audience.

Fritz Desir: In 2014, nontargeted advertising (AKA interruption advertising) has zero place in a marketing channel as data-rich as social media. As marketers, we need to vary what we typically think of as "targeting." While sophistication may not be readily available on all social media services, a social platform (to truly be seen as such) has behavior norms, modes of activity and use, as well as influencers. All of these are tools that can be used to communicate without (unexpectedly) disrupting the flow of an experience people have value for.

One of these tools or methods include what I refer to as "curation marketing," a trend which involves using tastemakers to curate experiences for your brand and post to a community on your behalf (I blame Oprah's "My Favorite Things" for this, but that's another story). The currency of social is attention-attracting and harnessing within a given platform. Go with the flow and derive value where it already is. Earned is the new owned.


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Vahe Habeshian is the director of publications at MarketingProfs and a long-time editor. Reach him via vahe@marketingprofs.com.

Twitter: @habesh

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Comments

  • by George Kane Mon Dec 2, 2013 via web

    I think Instagram has done a great job unveiling their advertising. I did not even realize it was an ad when I saw the MichaelKors advertisement. Instagram is already full of advertisements. People follow all sorts of products and people who are creating a brand image on instagram as users. I can't imagine that the new advertisements they put on the Instagram feed will be that much different than those people already see. If they could find a way to categorize people based on who they follow and give different people different ads, that would be icing on the cake.

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