Chances are Facebook is going to talk a lot about its photo-sharing app Instagram in its fourth-quarter earnings call in January.
Ad spend on the app is going through the roof.
Speaking on Nomura’s fourth quarter internet advertising trends conference call on Monday (for which Normura kindly provided Business Insider the transcript,) ad agency MEC Global’s head of social media for North America Noah Mallin said client spend on Instagram between the third and fourth quarter have been “off the chart in terms of percentage rate.”
“We’re talking something like 11,000%,” he said.
There’s a simple reason why this is the case. Instagram opened up its API (application programming interface) on September 30, meaning marketers of all sizes could begin buying Instagram ads in a self-serve fashion.
Before, buying Instagram ads was more of an exceptional case that required contacting an Instagram sales representative directly. That meant Instagram advertising was largely reserved for big advertisers, with big budgets, who were willing to put in the time investment involved.
Mallin said Instagram spend amongst his clients will probably be equal to about 2% of their spend on Facebook in the fourth quarter — which is huge considering how much advertisers spend on Facebook, and that advertising options are far more limited so far on Instagram compared to the range of formats Facebook offers.
What’s also interesting is that the growth of spend on Instagram isn’t actually eating into the amount they spend on Facebook ads. It’s helping clients actually spend more on Facebook, according to Mallin.
He said: “We’re not seeing cannibalization. What’s interesting is one of the things that Facebook is allowing us to do is to kind of cross-target from platform to platform. So we’re not seeing Instagram necessarily cannibalising from Facebook and I expect them to both kind of growth together, even as Instagram’s growth starts to outpace Facebook.”
On Facebook’s third-quarter earnings call, Facebook COO Sheryl Sandberg said “we’re really pleased with the marketer demand for Instagram ads.” She also responded to a question from one analyst who mentioned that the quality of some Instagram ads had decreased since the platform opened up its API.
In part to address quality issues, the company announced The Instagram Partner Program that has seen it form partnerships with 40 companies that have expertise in ad tech, community management, and content marketing. Those accredited partners work with advertisers of all sizes to help with their organic and paid-for Instagram strategies.
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