By: Stephani Estes

One of my favorite movie scenes featuring the late, great Chris Farley comes from Tommy Boy. He’s in the diner, explaining to a confused waitress why he’s such a failure at sales. To illustrate his point, he compares himself to JoJo the Idiot Circus Boy with a new pet.

I swear by the end of this article, I’ll explain why I bring up JoJo the Idiot Circus Boy. But first, let’s talk about Instagram.

After a rocky start, and 18 months of beta testing and tinkering, Instagram is finally rolling out its advertising platform to the masses. Armed with the data from those beta tests, as well as the resources of its parent company Facebook, Instagram’s announcement came with a few key updates:

Targeting

While pilot campaign participants were limited to basic demo targeting for initial campaigns, brands can now tap into interest targeting from Facebook, as well as leverage custom audiences using their first party data. The improvement in targeting was inevitable – knowing that Instagram was backed by one of the biggest data players in the game, we all assumed the targeting options had to improve for a global rollout.

Ad Formats

Instagram will now allow external links through its ad units, and are testing direct response format ads with a few select advertisers – calls to action include Shop Now, Learn More, Sign Up, and Install Now. These are in addition to the current formats: Photo, Video, and Carousel. This is arguably the most interesting update of the bunch. On the positive side, it shows that Instagram has been paying close attention to how people engage with brands on their platform, and provides a more seamless and direct connection between brands and consumers. We already know there is consumer interest in this; API partner Like2Buy has been filling that gap, and is seeing success with brands like Target and Gap. Linking out of the platform and directly to the page makes that process easier for the consumer. What remains to be seen is whether the outside linking capability will extend beyond paid ads and how that might impact partners such as Like2Buy.

On the flip side, there’s a bit of a negative connotation with “direct response” advertising, especially for a platform that has prided itself on artfully designed images and a beautiful user experience (and one that experienced backlash from the initial ad rollout). I can’t imagine being thrilled with seeing a “download now” ad for some cartoonish app game popping up in my feed. Jim Squires, director of market operations for Instagram has indicated that guidelines and algorithms will be in place to prevent this type of advertising. There were similar rallying cries for Facebook advertising, and that didn’t diminish some of the more questionable ads that pop up in newsfeeds. To be fair, Facebook has been trying to rein in some of those offenders, so let’s hope they’re applying those lessons learned to Instagram.

Instagram API

Marketers will be able to buy Instagram ads through a self-service API that begins rolling out to select brands and agencies in late fall. It’s assumed to be similar to the Facebook API. Instagram’s rationale for this move is to provide universal access to the platform for businesses both large and small. It also likely means a bid-based model for payment, which is good news for advertisers who couldn’t pony up the $200,000 minimum investment for the beta test. With the addition of direct response ad formats, advertisers will likely be able to optimize against reach and actions, as they can on Facebook. Hopefully, Instagram will maintain the recently announced Facebook CPC policy, which only counts clicks on links in the pricing model, rather than including other engagements like comments and likes. As far as how much these ads will cost, that is still up in the air – as of this fall, CPMs for Instagram were in the $20 range for photo ads, and $30 range for video ads. Under an auction model these will probably change and potentially increase as demand increases.

For many brands, the opportunity to advertise on a platform with more than 300MM active users spending on average 21 minutes per day engaging with its content sounds pretty darn good. And make no mistake – Instagram has data to back up why advertising on their platform works for brands. So this is one big win-win situation, right?

Let’s get back to Chris Farley.

Much like JoJo the Idiot Circus Boy and his pet, the advertising industry tends to love our new pets. We hug them and squeeze them until there’s just nothing left. We flood them with ads without keeping an eye on how those ads impact the user’s experience. It happened with Facebook. It could happen with Instagram if we’re not careful.

The rollout of advertising on Instagram has been slow and deliberate, and with good purpose – they want to maintain the integrity of the user experience, especially after feeling the heat from the reactions to the first ads. As marketers, we should applaud that. A crappy user experience doesn’t do advertisers any favors. But Instagram needs to strike the right balance between paid and organic content. A self-service API and pent-up advertiser demand can hasten the influx of paid content into the platform, even with a slow rollout. In theory, the guidelines and algorithm should help ensure that the ads that run are up to snuff. With pilot advertisers, Instagram has been mindful of frequency, and has monitored that closely. Of course, once the API is open and more advertisers start vying for that inventory, Instagram will either have to limit that inventory (which will drive pricing up) or risk turning the user’s feed into an ad extravaganza (as happened with Facebook). Does this mean every Instagram user will embrace paid ads in their feed? Of course not, but Instagram will need to be good stewards of the platform and listen carefully to keep its coveted engaged audience as happy as possible.

As advertisers, we also have a responsibility.

First of all, understand how your target uses the platform and engages with your content. If your first thought is to use Instagram because it’s where all the cool kids are, you’re only half right. Understanding how the consumer uses Instagram answers the all-important questions of why and how you should be on the platform (as well as how much you should invest in that platform, for that matter). Secondly, have a content strategy (this should be a given, but still…). Your content strategy is inextricably linked to the consumer experience. In order to help maintain the user experience, we need to provide content (even paid content) that consumers actually care about, in a way that provides value based on how they use the platform. Much like you should have a good content strategy for your organic content, your paid content should be purposeful and well thought out. Lastly, just because you can do something, doesn’t mean you should. Yes, call to action buttons make tracking success easier (assuming Instagram provides good access to that data…which they will, right Instagram?), but understanding how and when to use them is important.

So, what’s the moral of the story? New advertising platforms are exciting and fun, and it’s easy to run down the rabbit hole of “how can I monetize this?” and “how can I use this to sell stuff?” in the early days. We all need to proceed with caution to find the right way to connect with consumers on Instagram in ways that complement and enhance the user experience as much as possible. Remember the lesson from Tommy Boy – if you have a customer who’s even remotely interested in a sale, don’t be JoJo the Circus Boy. Be careful with that pretty new pet.

Sources:

Instagram’s new ad formats.

This is why we can’t have nice things.