What Instagram’s Direct-Response Ads in Stories Means for Marketers

Instagram has officially announced a significant expansion of its advertising capabilities— they’ve released direct-response Story ads that are accessible for self-serve buys. This means that ads within Instagram Stories can prompt users to ‘swipe’ and visit a brand’s site or complete an action, such as installing a mobile app.

Five years ago, Facebook announced the $1 billion purchase of the photo-sharing app, Instagram. Now regarded as one of the best business acquisitions in Silicon Valley history, Instagram has grown from 30 million users with zero revenue to its current 600 million user base and a projected $4 billion in revenue for this fiscal year.

In 2017, analysts predict that Facebook will bring in $37.9 billion in total revenue, up from $27.6 billion in 2016. Based on last year’s estimates, Instagram could very well account for 20% of Facebook’s total revenue growth. Facebook has enjoyed so much success and scalable growth due to their suite of ad units, all of which can be tailored to specific campaign objectives and reach users on both Facebook and Instagram. Prior to the launch of direct-response ads, Instagram rolled out Story ads with links, in which users could ‘swipe up’ to visit the handle’s website. This format obtains a 15-26% swipe-through rate for brands and publishers, and now this same feature is available for advertisers to leverage for direct response.

Instagram direct-response ads are available through Facebook’s self-service ad-buying tools,  including Ads Manager, Power Editor and through its advertising API. In addition to their direct response debut, Instagram now permits advertisers to identify objectives and goals for their ads, including viewing a video, visiting a website, installing an app or completing a specific conversion action. Brands are afforded a single vertical photo or video that lasts up to 15 seconds long and can tap into Facebook’s various targeting opportunities to include age, gender, location, interests and purchase history.

Unlike traditional ‘swipe up’ Story ads with links, direct-response Story ads are priced on a per-click basis and can directly influence a conversion by redirecting the user to the advertiser’s website/specific product page. Instagram Story ads feature a message on the bottom of the screen prompting users to swipe up to take action, whether that be to visit a website or install an app. Advertisers can choose from a host of calls to action, including: Apply Now, Book Now, Contact Us, Donate Now, Download, Learn More, Send Message, Request Time, Start Order, Shop Now, Sign Up and Watch More.

Snapchat ushered in a new era of social media advertising with its launch of Snap Ads with Attachments a year ago, and unlike Facebook, Snapchat offers more ad units. For example, Snap Ads allow advertisers to serve in-app advertorials or native extended video when people ‘swipe up,’ keeping the user within the Snapchat interface. In terms of ad unit options, Snapchat definitely takes the cake with the types of units available, especially since it carved the path for Story ads while Instagram merely adapted and evolved.

However, both social media apps offer substantial opportunity for publishers. Snapchat requires exclusive publisher partnerships, and their publisher feed is adorned with major media outlets such as Conde Nast and Buzzfeed. Contrary, Instagram doesn’t require partnerships and publishers don’t share in the revenue on Instagram. So, while Snapchat is a great tool for generating new content and making money— if you’re not a partner, then you’re out of luck. As a result, publishers have flocked to Instagram to take advantage of Instagram Stories.   

Lastly, in terms of price for each ad unit, Instagram is managed through Facebook, warranting advertisers Facebook’s scale and ad technology to serve highly targeted ads in the most cost efficient way. Instagram Story ads are reported to cost half the price of Snapchat ads, with one source claiming a $4 CPM (price per 1,000 impressions) versus $8.50 for Snapchat. For this same campaign, 4.5% of Instagram users watched the video in full in comparison to only 3.5% of Snapchat users (of course this is only indicative of one campaign).  

In comparison to its parent company, Instagram still underperforms to such a degree that if there is a small budget, then advertisers should be allocating efforts to Facebook. The appetite for Facebook still dominates due to more inventory and higher engagement, but this doesn’t mean you should discount Instagram. Instagram is primed for mobile app downloads, and as we look to the future, we predict that this is the niche that the platform can hone in on.

Further, Instagram-conducted eye-tracking studies confirm that users gravitate towards the upper left crest of their screen where the brand’s account name is. At the end of the day, Instagram has proved it’s no longer just a creative platform for latte art and sunsets; it’s a crucial touch point that plays an impactful role across the consumer path to conversion.