Industry POV

“Is 2016 the year of Instagram?” - Gautam Mehra


While most marketers in the world are blinded by the sparkle of Facebook, the social media giant's sister platform Instagram, a company it acquired in 2012 for $1.3 billion, has been slowly but steadily making a name for itself among users and brands.

Late last year, Facebook reported that the video and photo sharing platform now has more than 400 million users across the world. A survey by market researcher Neilsen stated that monthly active users of Instagram have doubled in one year in the country as of September 2015. Another study by consultancy selfstartr, meanwhile, observed that where Facebook's potential organic reach to adults has decreased 60 per cent since 2012, Instagrams’ has increased by 200 per cent.

Looking at these statistics, it has always been a bit of a surprise that Facebook has not looked at monetizing Instagram much earlier. The Facebook-acquired platform first unveiled its ads product back in November of 2013, and has been rolling out ads slowly to eight countries since. However, Facebook supremo Mark Zuckerberg has always been protective about the platform and has repeatedly mentioned about the need to take things slow with Instagram.

Well, as of last year, Instagram finally opened up its doors to advertisers in 30 countries, including India. This announcement, made in September, came on the heels of it being announced that the Instagram ads API would be opened up for advertisers.

Since then advertiser interest for Instagram has soared. As one digital Head pointed out, CPM for Instagram ads have jumped more than 20-30 per cent since September 2015. "We have seen big brands, which only do performance advertising, agreeing to have a brand campaign run on Instagram," he added.

So why does Instagram manage to comfort and excite advertisers?
One reason could be because of the sharp and harmonious relationship that exists between Instagram and Facebook. As Gautamm Mehra, VP and Head (Social Media) for iProspect India, points out, "One thing they (Facebook) has been very smart about is making the whole process of advertising on Instagram very simple. You can buy Instagram ads directly from the Facebook console. Facebook native ads are also adjusted to run on Instagram." Instagram also makes use of Facebook's trusted targeting system, which is an added bonus in the eyes of the advertiser.

This is not to say that Instagram's fortunes are intertwined with Facebook's. Digital agency Heads we spoke with were clear that interest on Instagram-only campaigns has been growing since last year and is only expected to increase in 2016.

"Instagram as a platform benefits brands with integrated management and extended mobile supply. Brands such as Paper Boat and Universal Music India have tailored content for Instagram and leverage Instagram advertising as a means of increasing outreach for it. The potential for Instagram advertising is huge as it breaks the clutter from brand induced advertising and focuses upon interesting stories through visual content," says Zafar Rais, CEO of Mindshift Interactive.

Then there is also the not so small question of the quality of audience. The Neilsen research that we quoted from earlier, for example, says that the average Instagram user is from a higher income background (79 per cent from NCCS A&B households). The report further states that 37 per cent users have more than one car, while 25 per cent (compared to the Indian average of 5 per cent) are postpaid customers. The average price of their headphones is Rs 17,000, as compared to the Indian average of Rs 13,200. Even more interestingly, Neilsen determined that online shopping was a major reason why Instagram users followed brands.

"(Instagram) more for aspirational users. They are more affluent and have a higher propensity to spend. The quality of replies that you get on Instagram also tend to be better than Facebook. It is less 'massy' so you can have more intelligent conversations," opined Pratik Gupta, Co-founder of Foxymoron.

Explaining this point further, Mehra adds, "They (brands) now have access to an audience that they earlier could not reach out to." This explains why the brand in the earlier example agreed to carry out a brand campaign on Instagram. For brands targeting the spending audience, Instagram seems tailormade.

However, the challenge is to create content for a platform which is highly visual. Gupta agrees that the creative struggle needs to be cracked. "Very few brands actually create content for social media. It is more a question (for them) of adapting content to the platform," also opined Mehra. This fact becomes even more important with the addition of Instagram Videos.

Apart from this, there is also the perception that it is a medium that makes sense for only certain types of brands. Despite this, 2016 could well be the year when Instagram proves to be the secret weapon in Facebook's arsenal.