7 Things CMOs Need to Know About the New Instagram Ads

Since it launched in 2013, Instagram’s advertising platform has been reserved mostly for the Lexuses and Burberrys of the world. But that’s about to change. Earlier this month, Instagram finally opened its API to select marketing partners—and will soon open up the platform for businesses big and small.

“We’ve spent the last 18 months establishing the platform for large brands,” Jim Squires, director of market operations at Instagram, told eMarketer. “The next logical step is to empower businesses of all sizes. Being able to target narrower segments and achieve different types of objectives is essential.”

To bring these new advertisers on board, Instagram launched its long-anticipated API to allow brands to run their own campaigns. Though the API is currently open only to select partners, the platform plans to open the API to anyone—just like on Instagram’s parent company, Facebook.

Previously, Instagram worked closely with a group of hand-picked businesses (and used a traditional sales team) for advertising.

Along with this development, the photo-sharing app rolled out new features like “Buy” and “Learn More” buttons and hyper-targeting. According to Instagram’s blog, the company hopes its evolving ad format will serve common advertiser goals like generating awareness, website visits, offline sales, sign-ups, product buys, and app downloads.

Thanks in large part to these new ad features, eMarketer predicts that Instagram will generate $2.81 billion in mobile ad revenue by 2017 (compared to $595 million this year).

And beyond the new features, eMarketer has good reason to predict such a huge revenue jump.

According to a May study by Strata, 34 percent of U.S. agency professionals identified Instagram as the social network they were most likely to use for client campaigns, ahead of Pinterest, Snapchat, and LinkedIn—and that was before these new capabilities were even released.

Adding fuel to the flame, Instagram now boasts 300 million monthly users, making it the second-largest social network in the U.S., second only Facebook.

If you’re chomping at the bit to get in on the Instagram game, you should be aware of what you’re getting into. Here, we’ll provide everything you need to know about Instagram advertising.

Let’s start by looking at four distinct features of the platform. Then, we’ll close by covering three of the most important tips and tricks to remember when advertising on everyone’s favorite photo sharing network.

1. Carousel ads

Instagram introduced carousal ads on a limited basis in March of this year. Before then, brands only had the option of using single images or 15-second videos for ads. With carousel ads, advertisers can include up to four rotating photos accompanied by a caption in their sponsored Instagram posts.

For example, to show off its new spring collection, Banana Republic used Instagram’s carousel ads to show off four different looks.

Though the feature appeals mainly to similar retail brands, the Instagram business blog states that for any business, carousel ads can “bring the potential of multi-page print campaigns to mobile phones.”

2. Direct response buttons

Gone are the days of pasting un-clickable links into the captions of your Instagram pictures. With direct response buttons, brands can now enable Instagram followers to take a specific action after seeing an ad.

“This completes the customer journey,” Squires told eMarketer. “From being inspired by an image, to learning more and seeing different angles of that view, to taking an action.”

Advertisers can choose from four different call-to-action buttons, including “Learn More,” “Install Now,” “Sign Up,” and even “Shop Now.”

“Each button will open up a browser that takes the user to a page on the advertiser’s website, or to a location within one of the mobile app stores,” the eMarketer report states. “Users will be able to return to Instagram by tapping a back button or ‘X,’ depending on their device.”

It seems Instagram is being less aggressive than Facebook about calls to action, since the buttons on existing campaigns have been present on just the last three photos of a four-photo carousel ad. That means you have to hook viewers with your first image before you can ask them to take an action.

For example, GMC collaborated with Instagram to create an ad that turned three carousel photos into one panoramic image. The user wasn’t able to see this panorama or the “Learn More” button until they swiped left—though the tease of the first image likely prompted more than one user to see the rest of the panorama.

3. Targeting

Instagram advertisers have always been able to target audiences by age, location, and gender. But now, Instagram is working with parent company Facebook to reach users based on their interests and connections on both networks—a uniquely powerful data set of people’s personal preferences.

Instagram also pulled the effective Custom Audiences tool from Facebook. Custom Audiences allows advertisers to upload their own information about their consumers—such as subscriber lists—to the platform. They’re then able to combine their custom information with Facebook’s targeting options to reach their ideal audience.

4. Measurement

Targeting isn’t the only feature Instagram is pulling from Facebook’s proven capabilities. The other side of analytics, measurement, is also getting the Facebook treatment.

According to eMarketer, before this rollout, Instagram advertisers received a personalized study from Nielsen that tracked awareness, purchase intent, and audience preferences. With the new direct-response buttons, however, brands can track who is clicking through those buttons and who goes on to download an app or make a purchase after engaging with an Instagram ad.

That’s great news for CMOs trying to demonstrate clear ROI from their social campaigns.

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Even with these helpful features, jumping into a new ad platform can be overwhelming. To help, let’s look at three tips to keep in mind when tackling Instagram advertising.

5. Keep it high quality

Just like on Facebook, Instagram’s algorithm favors ads that engage more users with relevant content.

This process accounts for “a really high-quality experience for individuals,” says Squires. “Signals such as negative feedback rates, ad engagement rates, and comments on those ads are fed back into the system. All of our models will get trained to deliver the most relevant, most interesting types of creative.”

eMarketer suggests honing in on your audience and understanding their specific interests before launching campaigns, and creating original content that fits Instagram’s unique square format (or landscape or full-size portrait, as of August 27).

6. Instagram isn’t just for premium brands

Earlier this month, our editor-in-chief Joe Lazauskas and marketing manager Jess Black spotted one of the first B2B Instagram ads from Facebook Marketing Partner Smartly.io.

At first glance, the ad isn’t much to write home about. It features a dude with a startup t-shirt and a bland caption. But, as one of the first B2B ads in a space dominated by high-end brands, it caught their attention.

After clicking the “Learn More” button, they were taken to a landing page about best way to automate Facebook advertising. That’s when Lazauskas realized the ad was genius.

He writes, “By striking early and releasing one of the first B2B Instagram ads, Smartly.io was taking advantage of a temporary phenomenon—the ad format in itself was enough to draw social-marketing-obsessed people like Jess and me in, and they had clearly targeted us using the arsenal of Facebook user data that powers Instagram ads.”

In other words, the time is right for B2B brands (or any other brands who might not traditionally associate with the visual platform) to jump on Instagram advertising and make their mark.

7. Instagram ≠ Facebook

Despite Instagram mirroring the targeting and measurement capabilities of its parent company, it’s important to remember that Instagram is not Facebook.

First off, Instagram’s user base is younger than Facebook’s, and consists of higher-income US teens. Additionally, people use each platform for different reasons. Instagram is entirely focused on photos and videos, whereas Facebook provides options to post different kinds of content, like text and articles.

Instagram’s users are also much more willing to engage with brands. According to an infographic fromSelfstartr, 68 percent of Instagram users engage with brands, compared to 32 percent of Facebook’s users who do the same. Instagram also has 58x more engagement per follower than its parent company.

In fact, Smartly.io Account Manager Markus Kettner told Lazauskas that their Instagram ads were generated over twice the click through rates as their Facebook ads, at the same cost per click. Of course, not every brand will see such encouraging results, but it’s obvious that Instagram can be a highly efficient ad platform.

To prepare to advertise on Instagram, CMOs should figure out where the platform fits in their purchase cycle and understand how their key audiences are using the mobile app to find new content that they’re interested in.

With Instagram’s increasingly massive user base and Facebook’s beloved advertising capabilities, CMOs would be remiss to ignore Instagram. Once the API goes truly public, the platform may just end up eating into Facebook’s domination of social media ad spend (which hit 75 percent of the total in 2014)—not that Facebook would too upset.