Social Media

What Do Instagram Advertisers Actually Get for Their Money?


It has now been about a month since Instagram (FB) users have been subjected to ads in their feeds, and the photogenic world somehow hasn’t ended. In fact, the companies behind the ads seem to be reaping some benefit, even if the actual value proposition here is still a bit foggy.

Curalate, an outfit working with companies that want to advertise on social media, looked at all five brands included in Instagram’s first push. If nothing else, the paid ads were much more effective at attracting likes than the unsponsored posts by the same brands, as the chart below shows:

How much are a few hundred thousand “likes” on Instagram worth? That’s debatable. Once someone has “liked” an advertiser’s post, there is a higher chance his friends on the service will find it. And there’s a squishy sort of credibility that comes with having a big number on your posts.

The greater value may come from attracting new followers, each one essentially extending an invitation to the brand to continue advertising directly in a user’s feed. According to Nitrogram, which gathers analytics on Instagram, Michael Kors gained an average of 54,000 followers in the 18 hours following each one of the company’s ads. ”If you have to do a little bit of advertising to get permission to engage, is it ultimately worth it?” says Apu Gupta, Curalate’s chief executive. “It may be.”

What the ads don’t offer is any clear way to drive immediate sales, since companies can’t include links. Instagram hasn’t yet offered any data on its first crop of ads, and a spokesperson for the company declined to comment. Just before the ads were launched, Emily White, Instagram’s director of business operations, said the value was somewhat unmeasurable, because the ads are more about branding than inspiring immediate transactions.

“There’s a lot of value in impressions and views that may not be captured in likes or comments,” she told Rebecca Lieb, an analyst at Altimeter, in October. “Instagram will guarantee a certain number of impressions initially, which will vary by campaign. This is a premium brand advertising product. Success is brand lift over a longer period of time.”

This isn’t an easy thing to measure. But Nitrogram was game to try. As part of its analysis, the company analyzed the comments left on each of the four ads by Michael Kors. For the first one, about 3 percent of the 1,600 comments expressed some intention of purchasing anything. That proportion increased steadily, topping off at about 13 percent of comments about the most recent ad.

Because the total number of comments dropped off as more ads ran, this doesn’t mean that more people were saying they’d buy the company’s products. Instead, it is a reflection of the subdued hostility toward the whole idea of ads on Instagram. On Michael Kors’ first ad, more than 800 comments were negative, about half the total. That dropped off significantly, as each subsequent ad drew fewer negative comments. In other words, it seems that people quickly tired of complaining. For both Instagram and the companies that want to use it for advertising, that’s probably good news.

Brustein is a writer for Businessweek.com in New York.

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