Instagram Unleashes a Fully Operational Ad Business

Instagram’s ad business is growing up fast thanks to a boost of new technology from Facebook. Today, the popular photo-sharing app with more than 300 million users and counting is opening up to potentially millions of advertisers, with more ad styles and sophisticated targeting tools first honed by its parent company.

Instagram is launching ads with “Shop Now” buttons and other messages that link outside the app so users can take marketable action. Also, there’s a new API—software platform—that lets marketing partners automate the advertising process.

The API comes polished—able to manage, track and measure marketing campaigns—thanks to borrowed technology and lessons learned from Facebook, said James Quarles, Instagram’s global head of business and brand development. Advertisers can reach users based on more than just their ages and genders, targeting interests gleaned from Facebook profiles.

“We have benefitted greatly from being a part of Facebook,” Quarles said. “It would have taken us years to build this tech stack for ourselves. So, we’re fortunate to be able to take select pieces of Facebook’s tech stack.”

Facebook bought Instagram for $1 billion in 2012, when it needed to secure a hold on the mobile future. Ads launched on the app in late 2013, and they have since been an exclusive offering for select brands.

The ad design has been all about customizing commercial content that blends as much as possible with the rest of people’s photo feeds without disrupting the experience too much. There is always a fear that the introduction of ads will turn users off and send them packing. When the Instagram community first saw sponsored images, there was a fair amount of backlash from consumers who didn’t welcome posts from brands they weren’t following.

Instagram has run 475 campaigns with big names like Disney, Electronic Arts, The Gap, Ben and Jerry’s, Michael Kors and Taco Bell. Brands promoted glossy, magazine-style photos, 15-second video ads and new Gif-like cinemagraphs.

However, Instagram never allowed links that took users outside the app to buy the products in the pictures. To do that, brands like The Gap have used third-party services, including Like2Buy.

“It’s an ideal platform to shop on as it’s so visual and fashion oriented,” said Old Navy media director Michele Schuh in an email to Adweek. “We’re thrilled that Instagram is now offering users the ability to click directly through to a product, creating instant gratification without any cumbersome steps.”

Instagram has always been viewed as a potential shopping channel, able to drive users to buy products or download apps. The only question was whether the company and its CEO Kevin Systrom would allow such marketing tactics.

“We always felt Instagram could be a really useful platform for performance advertising,” said Kfir Gavrieli, founder of Tieks, a fashion brand with a large social footprint. “Honestly, it wasn’t clear that they ever would do this, because Instagram was all about beautiful photos and imagery. So this was a surprise to us.”

Marketing-software companies like Salesforce and Nanigans will start offering the option to buy Instagram ads to their clients, who already use the platform to plan and measure their social-media advertising.

Nanigans works with advertisers that specialize in direct-response marketing in sectors like travel, finance and e-commerce. These types of marketers will spend as much as they can as long as the ads bring customers, according to Nanigans CEO Ric Calvillo.

“Assuming the API behaves similarly to Facebook’s, it unlocks a lot of quick demand,” Calvillo said.

Facebook has 2 million advertisers that are now potential Instagram clients, as well. Among them are niche companies like Chef’s Roll, a hub for thousands of chefs to share across social media and blog networks. The subject matter is a good fit for such a food-focused audience, according to Chef’s Roll CEO Thomas Keslinke.

Chef’s Roll helps food organizations like the American Lamb Board and Avocados From Mexico team with its chefs to create content. Now, it can promote that content to thousands of foodies using the same targeting the company uses to buy ads on Facebook.

“Rather than blanket a website or magazine, we are able to pinpoint who we want to reach,” he said.

Quarles said consumers have shown an interest in shopping via the app—Instagram has seen users grab screenshots of posts, which could mean they intend to learn more about the products featured. Now, the posts will have Shop Now, Book Now, Download, Learn More and Sign Up links.

“It’s not enough to just inspire; you want people to be able to take action,” said Jason Stein, CEO of Laundry Service, which works with brands like Beats by Dre, Amazon and Jordan on Instagram marketing campaigns. “I can’t tell you how many people are saying on big brands’ posts, ‘How do I buy this?’ There is a demand that people want to take action.”

The rise of ‘micro-influencers’ on Instagram

The rise of ‘micro-influencers’ on Instagram

There’s such a thing as being too popular.

It turns out that once a social media influencer reaches a critical mass of followers, audience engagement actually begins to decrease. A survey of 2 million social media influencers by influencer marketing platform Markerly showed that for unpaid posts, Instagram influencers with fewer than 1,000 followers have a like rate of about 8 percent, while those with 1,000 to 10,000 followers have a like rate of 4 percent.

As following base continues to increase, like rate keeps decreasing. Instagram influencers with 10,000 to 100,000 followers see a 2.4 percent like rate, compared to 1.7 percent for those with 1 million to 10 million followers and more. Comment rate follows a similar pattern.

The findings apply to sponsored Instagram posts, too, which suggests the sweet spot for maximum impact is an influencer with a following in the 10,000 to 100,000 range. Call them “micro-influencers.”

Markerly Stats
Markerly Stats

Sarah Ware, CEO and co-founder of Markerly, said that when her company engaged with the Jenner and Kardashian sisters on Instagram on behalf of a weight-loss tea company, the celebrities helped bring hundreds of conversions. Which was nice. But by activating 30 to 40 “micro-influencers,” the brand was able to convert at an even higher level.

It’s a simple math. If a sportswear company, for example, collaborates with a social celebrity with 2 million followers, it can reach a big pool of audience, but 90 percent of them may not be sports fans. It would make more sense to activate 100 self-proclaimed athletes whose followers are actually interested in athletics.

While the ultimate payoff may be greater, it’s still more work for brands, conceded Ware. A celebrity, she said, is a highly visible one-stop-shop. “In comparison, brands need to find a proper search engine to identify ‘micro-influencers’ quickly.”

The idea of micro-influencers has already been gaining traction at some agencies. Fergus Thomas, co-founder of social marketing agency Irban Group, used the term “power middle influencers” to describe social media users who typically have around 100,000 to 200,000 followers. Creating content for a brand is still secondary to their full-time profession, so they post sponsored content less often than social celebrities. And thus they feel more authentic. “With the same amount of budget, brands can collaborate with 20 or 40 ‘power middle influencers’ to reach different demographics and see better engagement, compared to one or two celebrities.”

Social ad platform Gnack, on the other hand, defines everyday social media users with fewer than 10,000 followers as micro-influencers. Their followers usually consist of their friends and family, so their posts are much more trustworthy and engaging.

“More than 55 percent of our agency partners have incorporated ‘micro-influencers’ as a part of their [current] strategy,” said Chico Tirado, the company’s chief revenue officer. “We’ve seen some ‘micro-influencers’ on certain campaigns get up to 25 percent engagement.”

As Instagram recently changed its algorithm to favor quality content, Gnack’s CEO Chris Gonzalez predicted that posts from “micro-influencers” will become more visible on the platform. After all, content from friends and family members is often prioritized by any social network.

“We see micro-influencers get an average of two-to-five times more organic engagement per Instagram post, compared to those with more than 100,000 followers,” said Gonzalez. “Their content will be organically performing better on the platform due to the inherent superior engagement.”

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3 Big Instagram Marketing Predictions for 2017


3 Big Instagram Marketing Predictions for 2017

3 Big Instagram Marketing Predictions for 2017

Last year was a huge year for Instagram, with the app releasing over 20 new features! Stay ahead of Instagram this year with these 3 big Instagram marketing predictions for 2017:

Instagram Prediction #1: Clickable Links Will Finally Come to Instagram

Like I mentioned in LinkedIn’s 50 Big Ideas for 2017 post, I am predicting that Instagram will finally bring clickable links to photos. For years, the only place you’ve been able to click on a link in Instagram is through the link in your bio. Brands, influencers, and small businesses have had to get creative when it comes to making sales and driving traffic through Instagram, which is why the phrase “Link in bio!” is so popular on Instagram.

s that leverage the link in your bio, like Later’s Linkin.bShoppable Instagram feedio product, are exploding in popularity, and with new features like Instagram shShopping and clickable URLs in Instagram Stories for verified users, I’m betting that 2017 will be the year Instagram grows up as a marketing platform and finally gives us what we’ve all been waiting for.

However, even though Instagram has been looking a lot more like Facebook lately, we don’t think that clickable links on Instagram photos will be as simple as clicking on a URL. Expect something more creative that fits well with the existing Instagram experience, but also caters to the brands and businesses that Instagram wants to attract as customers.

Instagram Prediction #2: Instagram Starts to Seriously Drive Sales in 2017

2016 was the year that Instagram grew up as a platform, offering new business profiles and Instagram analytics for the first time, in an effort to entice more businesses to use the platform and purchase ads. But you don’t have to create an Instagram ad to make sales, and in 2017 retailers can expect a big increase in revenue from Instagram.


  1. Consumers are spending more time than ever on mobile devices, and mobile internet traffic is now greater than desktop.
  2. 78% of consumers make purchasing decisions that are influenced by a brand’s social media, and 70% of Instagram user have searched for a brand on Instagram.

In 2017, look for more brands to bring the shopping and buying experience straight to their customer’s Instagram feeds. Instagram is the perfect platform to drive sales for online retailers because it is both visual and mobile-first, and has gained a lot of trust from it’s users as it’s seen as a more “authentic” channel than Twitter or Facebook.

Create a Shoppable Instagram Feed

Instagram feeds are becoming the new storefront, and a major Instagram marketing trend in 2017 will be online retailers using user-generated content (UGC) from Instagram to help drive sales on their website. Whether that’s with Instagram gallery pages on their product pages or re-posting community content featuring their products in “real life,” successful marketers and business owners will be investing in selling through Instagram in 2017.

Relatedly, another major marketing trend for 2017 will be aligning social objectives and KPI’s with the larger business and marketing goals of an organization. In short, 2017 is the year that social becomes accountable to tracking cold, hard dollars through acquisition and conversion. Gone are the days when likes and followers are all that matters, and in 2017 we can expect Instagram marketing to be taken as seriously as other digital marketing channels – and to be driving some serious sales.

Instagram Prediction #3: 2017 is the Year Instagram Stories Dominates Snapchat

One of the main differences between Instagram and Snapchat stories has been the lack of fun filters, geo-filters, and stickers in Instagram Stories – until recently. At the end of 2016, Instagram launched stickers, which looks almost identical to Snapchat’s stickers. You can find customizable stickers for the weather, the current time, and even your location, just like you can on Snapchat.

So what’s left for Instagram Stories to copy? Snapchat’s signature puppy filter, of course. Facebook acquired MSQRD, a video app that lets you add “filters” to faces in early 2016, and by the end of the year we got the first taste of what MSQRD in Facebook would look like with Messenger’s new camera.

Messenger’s new camera looks and behaves eerily like Snapchat, with the ability to add face filters, stickers, and borders to your photos or videos. In 2017, expect these same filters to come to Instagram Stories, which may just be the final nail in the coffin for Snapchat. Marketers should invest in building their Instagram Stories strategy now, because it’s only going to grow even faster in 2017.

That being said, don’t count Snapchat out entirely – they have been the innovators in this space, creating fun growth hacks to boost user engagement with features like FaceSwap and puppy filters, and it’s likely that Snapchat could come out with something new that blows Instagram Stories away.

What do you think will be the biggest Instagram marketing trends for 2017? Let me know in the comments!

Want to stay ahead of your Instagram marketing in 2017? Sign up for Laterto start planning and scheduling your Instagram posts!

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