Instagram moves to monetise: Ad format of the future?

Although clearly labelled as 'proposed', the ad format  fits neatly into the Instagram environment, according to Michael de Souza, general manager at Mobext Singapore, Malaysia and Vietnam.

The format is simple and clearly indicates that the post is sponsored, which makes ads less “loud”, he said. “I especially like that they allow users to provide feedback about less interesting ads, and hide the photo or video.”

At present only users in the US will view the ads, and Instagram has chosen to test-drive the format with several brands that have strong Instagram communities, including adidas, Ben & Jerry's, Burberry, General Electric, Lexus, Levi's, Macy's, Michael Kors, PayPal and Starwood. 

"By limiting initial inventory to brands they know to be at the top of the Instagram content game, Instagram is taking a carefully measured first step,” said Yean Cheong, head of digital for IPG Mediabrands Asia-Pacific. “It may be an initial step, but it's an incredibly useful one as many of these brands already have large followings and are setting the content bar for future advertisers.”

Canny marketers are already taking advantage of Instagram to promote their businesses and maintain relationships with their customers and followers, de Souza said, adding that, “Instagram ads will allow them to widen the net, and pay to be exposed to new users”.

Relevance will be key, said Cheong. "It's going to take a commitment to brand, content, and audience to show success in the Instagram paid-placement space, as its users are fiercely protective of their content, friends, and those of whom they are fans."

The danger will be if the experience goes the way of Facebook, de Souza warned, due to obnoxious advertising from "stack 'em high, sell 'em cheap" brands that fail to target appropriately. “While such activity has provided short-term ad revenue to Facebook, it's ultimately damaged the Facebook brand,” he said. “I hope Instagram will defend the experience of their users sufficiently.”