The glossy image-based social network Instagram brought its advertising platform to Germany together with its resulting monetization about a year ago. Instagram now reports more than 1.5 million business profiles and more than 500,000 advertisers in addition to its 500 million members worldwide. It also claims to have generated more than a billion actions with its new "direct response" ads and their call-to-action buttons.
Direct-response ads are one of the new Instagram for Business functions that were recently launched in Germany. These functions support business profiles with enhanced contact features, generate statistics and add a call-to-action button to ads. All this means that online shops and businesses of all kinds can now sell products on Instagram, as well as generate leads, downloads and registrations.
In Germany, Kapten & Son is an outstanding example for the potential penetration power of Instagram influencer marketing and ad campaigns. This small, minimalist designer watch brand has gained some 400,000 followers and sells its products from its online store, including via Instagram.
We talked with James Quarles, VP of Monetization, about the new ad format, the buy button and covert advertising on Instagram.
t3n: You recently opened up the possibility for companies to post "direct response" ads on Instagram that enable transactions. Links had previously been fairly taboo on Instagram, and are new for users. What kind of content do Instagram users expect in ads like these?
James Quarles: Currently there are around 500,000 advertisers of all sizes on Instagram worldwide, such as Kapten & Son in Germany. We help companies connect with Instagrammers' passion, and turn this passion into a purchase. We call this pathway from pure inspiration to action "storyselling."
In most marketing departments today there is a team for brand marketing and another team for performance marketing. The first create television ads, the second the web banners. Both departments try to toss these elements together and compress them into a mobile format. That doesn't work, because these formats aren't made for mobile: A TV ad takes at least 20 seconds to share what the brand is and what its advantages are. And banner advertising gives you no context. It just tries to hit you so often with a buy message that you will eventually hopefully be drawn in.
Storyselling means sharing with users in a video who you are, what your advantage is, what you stand for and where they can find your product. Is that branding? Is it performance marketing? It's both.
Small and medium-sized businesses have the advantage of not having this separation in their organizations. Smaller companies don't think like larger ones do. They don't think in compartmentalized departments, nor do they view their customers in the same way as large companies. I think that's why smaller businesses are often able to think their way faster into the storyselling format.
t3n: With its lead ads, Facebook has a format that natively generates leads directly within the Facebook app. Pinterest pushes the notion of keeping users on the platform even further, and has added a buy button. Does Instagram have plans for similar formats?
James: So far we already have a few call-to-action buttons with "Learn more," "Shop now," "Install now" and "Sign up." The last of these brings you to a form for lead generation that is already filled out with your email address so that you only have to confirm "Yes, I'm interested." The time between the user's interest and their readiness to actually buy is extremely short, at best a few seconds. So it has to go quickly. And so yes, we offer this possibility of generating leads, and will continue to support it.
About the buy button you just mentioned: I don't think the customer journey works that way. We have explicitly chosen not to build in a buy button. There are simply too many steps in the customer journey that happen somewhere else. Let me give you an example.
Here I saw the ad for a jeans brand called "Indestructible Denim." From this ad I found their website, which is really very well optimized for mobile browsing, and wanted to buy right there this very second. I didn't want to come back to it later.
The aim is to get people to enter into some kind of connection with the company. Then you can direct them without bias to the best buying opportunities. That might be a local shop, it might be online, or could be a major retailer like Amazon or Zalando. Or the company's own app.
We want to provide the best user experience for this customer journey. There is nothing more disappointing than seeing interest being prompted – and then having the user land on a website that is absolutely not mobile-ready. A suboptimal mobile user experience is one of the biggest mistakes made today.
t3n: You've created your own ad format, but undeclared advertising can still be found on Instagram. For example, influencers that hold their Gucci handbag up to the camera. What is your stance on this?
James: Our rules are unequivocal: influencers have to clearly announce any such relationships with advertisers. Also to comply with local laws and regulations.
We see great value in the relationships between businesses and influencers that are based on creativity. For example, when an influencer helps a company to present itself on Instagram – helps it be "instagrammy," as we say here.
Relationships between influencers and companies that are purely based on advertising, however, don't serve the community and in fact don't help the company either. If the company wants to reach a specific target group from among this influencer's 200,000 followers, such as young men between the ages of 18 and 24 who like soccer, then we have our targeting and measurement tools for reaching them directly.
t3n: The final question is very German: What about the legal notice? There's nowhere to put one, is that going to change?
James: Right now it's possible to include the legal notice right in the bio section. But we're taking a look at this.
t3n: Thank you for the conversation, James.
James: It was my pleasure.