How Instagram is winning brands’ video budgets despite “controversial” sales strategy

Neirfy / Shutterstock.com

Neirfy / Shutterstock.com

Of course Instagram wants more of the $9.9 billion brands are expected to spend on video ads in the U.S. alone this year. And it’s getting it.

Advertisers increased their Instagram video ad budgets by 70 percent on average between February 2016 and April 2016, according to automated ad-buying firm Nanigans, which caters to direct-response advertisers. Direct-response advertisers aren’t traditionally considered video advertisers — that’s supposed to be brand advertisers moving money from TV — yet more than 40 percent of Nanigans’ advertisers were buying Instagram video ads by April, compared to roughly 25 percent who were doing so in February.

With Instagram’s monthly audience of more than 400 million people and the Facebook data it can now use to target those people with ads, the photo-and-video sharing app could probably sell text ads, and brands would pony up.

But aside from the fact that people are actually watching videos on the historically photo-centric app — watch time went up by more than 40 percent between August 2015 and February 2016 — there are two major reasons marketers are buying Instagram’s video ads: 1) They’re not costly to run; and 2) Instagram is making them even less costly to produce, especially if they’ve already been produced for other platforms, like TV or Facebook.

“From a media side, we’re seeing really efficient cost-per-views at between $0.02 and $0.10 and a $7 to $10 [cost per thousand impressions],” said Chris Tuff, executive VP and director of business development and partnerships at 22squared, which works with brands like Baskin-Robbins, Dunkin’ Donuts and GNC.

“Generally speaking, Instagram, across all creative formats, has proven to be pretty cost-efficient and has been for the last six months or so” since opening up an ads API to make it easier for brands to buy ads on Instagram, said Jeanne Bright, VP and group director for paid social at DigitasLBi, whose clients include American Express, Hermès and Taco Bell.

But the API rollout and associated cost-efficiencies aren’t the only ways Instagram has lowered the bar for advertisers, especially on the video side of things. Since August 2015, Instagram has increasingly made it easier for brands to take their ads running elsewhere and put them on Instagram. Instead of being limited to 15-second square videos, they could also run 30- or 60-second clips formatted horizontally, like a TV or YouTube ad, or vertically, like a Snapchat spot.

We’re in the #BigGame with @ChampagnePapi. #YouGotCarriered

A video posted by tmobile (@tmobile) on Feb 3, 2016 at 8:37am PST

Landscape videos that look standard elsewhere can stand out on Instagram, where square photos and videos are the dominant form. That’s why Periscope has gravitated to the horizontal form “for show-stopping announcements,” said Evan Carpenter, the agency’s director of community, who oversees social media strategy for its clients, which include Target, Trolli and DreamWorks.

Technically speaking, longer video ads do appear to translate into more time that people are spending watching a video. But not by much and definitely not in proportion to their lengths. When Kinetic Social reviewed data for Facebook’s and Instagram’s autoplay video ads combined, on average, 31 percent of people watch a 15-second spot to completion, compared to 18 percent for 30-second spots and 12 percent for 60-second ones. Put another way, if a brand puts a 15-second spot on Facebook and Instagram, the average viewer will watch 4.65 seconds of it. If it’s a 30-second spot, they’ll watch 5.4 seconds. And if it’s a 60-second spot, they’ll see 7.2 seconds.

“Longer form content should live on Facebook as well as more conversion-centric stuff,” said Tuff. “Leave Instagram to the artsy, visually appealing stuff.”

There are ways brands can give themselves a better chance of people watching their full videos. Using teaser ads can spark enough interest in a longer video that when the full spot drops “we’re seeing a 75 percent completion at higher rates than what we expected across the board,” said Periscope’s Carpenter, though he was unable to share actual figures. Still, that requires a whole messaging-and-targeting sequence, which is far from the norm.

“We are continuing to remind our clients that only 5 percent to 6 percent of consumers are getting to the end of their videos,” said DigitasLBi’s Bright. The agency and its clients measure their social video ad campaigns based on completions, not the three-second threshold that Facebook and Instagram use to measure views. “If you’re thinking about video completions, a 60-second video ad’s not going to do that for you, so we’re actually starting to develop shorter and shorter content than longer content,” she said.

Instagram has made recommendations to help brands and agencies deal with the fact that people may be less likely to watch an entire video. Use videos that can be viewed with the sound off. Call out the brand within the first few frames, as opposed to the closing shot. Make the opening shot compelling.

But it’s another recommendation Instagram’s and Facebook’s sales teams are making these days that’s rubbing some media buyers the wrong way.

“Recently Facebook has been advising brands to just use the same creative that is used on Facebook on Instagram, which is unlike what they used to say,” said 22squared’s Tuff. “That, to me, is not the right approach for consumers as well as brands to be effective” because Instagram feeds typically have a much higher content-quality bar than Facebook feeds.

“That’s been pretty controversial for us too because up until this year Facebook had said the Instagram experience is different from the Facebook experience and so you need to have different creative and different mindsets. Now they’re saying use the same creative on both places and expand your inventory,” said Bright.

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Maybe it’s not that hard to understand why Facebook and Instagram would shift their sales strategy. The companies have spent the better part of the past year creating parity between the two ad platforms, to the point that brands can increasingly buy and target their Instagram campaigns the same way they do their Facebook ones. That’s helped Instagram’s advertiser base swell to more than 200,000 brands, making it larger than Twitter’s base. But it risks turning Instagram into just another place for Facebook ads to appear.

“I don’t know why [they’re recommending the same ads be used on both platforms] besides the more cynical view: They just want more inventory,” said Bright.

“With that change in messaging there’s definitely a shift, and I do think it’s directly tied to the monetization drive,” said Carpenter.

Instagram’s Global Head of Business and Brand Development, James Quarles, maintained that Facebook and Instagram continue to differentiate between one another. “People go to Facebook to see the world through a personal lens; people come to Instagram for visual inspiration,” he said.

“What we’re advising agencies and brands is that great performing creative on television or on Facebook and other places can work on both Facebook, Instagram and other properties,” Quarles added.

While Facebook and Instagram may be trying to tell brands that great ads can work well on any platform, what those brands are hearing is that any ad that works on one platform is fine for the other. So agency execs have to talk their clients out of doing what Facebook and Instagram are telling them, and maybe even do the opposite.

“What makes more sense for me is to use Instagram videos for Facebook,” said Bright. “Because of the mindset and the content they’re surrounded by, Instagram requires a more inspired creative.”

Weirdly, while Instagram is considered an artsier environment, its video ads offer less of a creative canvas than Facebook’s versions. Instead of playing at full screen, they’re squeezed into a portion of the screen, an even smaller portion if in landscape format. Even Instagram’s recent move to put multiple video ads into its carousel format — following Facebook’s adoption last fall — doesn’t hold up to its parent company’s version.

On Facebook, the carousels prominently show one video while teasing another in a slice of the frame. Target used that appearance to create an interplay between its ads as a way to get people swiping through each piece of content. That wouldn’t be possible on Instagram, where only one ad in a carousel appears on-screen at a time, leaving it up to the viewer to see that they can swipe to see more spots and to decide whether they want to. Instagram’s Quarles said he’s “pleased with the metrics” around the number of people swiping through carousel ads but wouldn’t share specific figures.

Bright admitted to being against video ad carousels “for a long time,” but she took particular issue with the difference between how the video ad carousels work on Facebook versus Instagram. “It’s interesting to me that in that Target example, which I really love, you cannot use that well on Instagram. So it’s kind of going against what their new best practices are of being able to use the same between the two. The creative format looks different in both,” she said.

None of these issues are deal-breakers for advertisers on Instagram. Far from it. While the agency execs may not be wild about some the options Instagram has put on the table or the suggestions its and Facebook’s teams are making, they’re only options. If brands don’t want to repurpose their 60-second, widescreen Super Bowl spot across both Facebook and Instagram, they don’t have to. But Instagram’s still a place that attracts 400 million pairs of eyeballs each month, that lets them place their ads in front of a very specific set of those eyeballs and for not too much money.

The agency execs expect clients’ video ads spend on Instagram to continue to increase, in part because brands are moving more money to video ads in general, but also because “a lot of clients are getting more and more comfortable with Instagram,” said Bright.

And Instagram hasn’t even played its trump card yet. If Instagram wants people watching more videos, it can make that happen. Its parent company has. Facebook has positioned its video push as: people have shown Facebook they want to watch more videos, so Facebook is giving the people what they want. Instagram’s doing that, too.

Last year, Instagram started running video-only event feeds in its Explore tab, and last month, it introduced video channels in the algorithmically curated section. Guess what happened? People started watching even more videos. “That is where I think the time spent increase has come from,” Quarles said.

Now, Instagram is starting to algorithmically curate people’s main feeds. I wonder what will happen if that test turns into an official rollout. I guess we’ll just have to watch and see.


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