Instagram Advertising Competition Heats Up in Second Half of 2015, Signals Growth in the Year Ahead
Advertisers in Key Verticals Increased Spend, Experimented With Video Ads and Experienced Positive ROI on the Platform as 2015 Came to a Close
Boston, MA–January 25, 2016–Brand Networks, the leading provider of relevance-driven native social advertising and content marketing, today released the findings of a six-month study examining more than 1.6 billion Instagram ad impressions served by the company’s customers in 2015. An early participant in the Instagram Partner Program, Brand Networks tracked a variety of metrics related to spend and performance throughout the second half the year and found that advertisers are flocking to the platform—especially in the CPG, fashion and retail verticals. Advertisers are also experimenting with new video ad formats, and taking advantage of key dates during the holiday shopping season.
“We anticipated that pent-up demand for programmatic, native advertising solutions on Instagram would drive rapid adoption and eventually scale,” said Jamie Tedford, CEO and founder, Brand Networks. “However, the pace and scale of investment from our clients in key verticals exceeded our expectations dramatically. This year, we expect brands from a wider variety of industries will invest heavily on the platform, and experiment with a variety of ad formats—especially video—to stand out in the Instagram feed and reach valuable audiences. In addition to brand-building objectives, we’re also enabling more testing with direct-response ads, as social media users become more accustomed to CTA buttons and more apt to engage in social commerce.”
Increasing Demand Caused Surge in Pricing
Cross-industry benchmarks for cost-per thousand impressions (CPM) on Instagram have climbed, as advertiser competition has increased since the platform first opened its API to advertisers in August 2015. As part of the mounting groundswell of Instagram advertiser interest, Brand Networks witnessed a fluctuation across industries in CPM as global average costs grew from $5.21 in September to a peak of $7.20 in November, before cooling off at $5.94 in December.
Total impressions served on Instagram through the Brand Networks Platform increased to 50,000,000 in August, during Instagram’s Advertising Beta, then doubled to 100,000,000 in September, and again to 200,000,000 in October. The company saw continued increases throughout the holiday shopping season, as Brand Networks delivered over 500,000,000 impressions in November, and 670,000,000 in December. Based on this analysis, Brand Networks expects to deliver over 1 billion Instagram ad impressions per month by the end of Q1 2016.
CPG, Fashion and Retail Industries Winning in Unique Ways
Brand Networks works with some of the top Consumer Packaged Goods (CPG), Fashion and Retail advertisers in the world, and each of those three verticals showed standout performance on Instagram as Q4 progressed, particularly during the holiday shopping season. All three verticals increased their Instagram spend in November and December, spending roughly 3X more each with Brand Networks on Instagram ads during the holidays than they did during the summer and fall months.
- CPG: With CPMs that averaged out at $4.92 through the holidays, CPG brands achieved some of the best average costs of any industry while reaching their audiences at scale.
- Fashion: While Fashion retailers pay a much higher average of $16.93 for 1,000 impressions, targeting more coveted consumer spenders, the Fashion industry has found resonance quickly with those audiences, achieving a low cost per engagement (CPE) of $2.93. That’s $0.98 lower than the $3.91 average CPE witnessed by CPG brands.
- Retail: Retail advertisers have found less success with video ad engagement than other verticals, but clickable Instagram Share Ads and Photo Ads have performed remarkably well for this vertical, delivering average CPEs of $1.40 and $3.22, respectively.
Given the emphasis on stunning visuals, Brand Networks expects Fashion and Retail to continue their dominance in the Instagram advertising market in 2016. Although not highly active markets in 2015, the company also predicts a rise in video-centric advertising on Instagram will encourage more Health & Fitness and Travel-focused brands to break into the platform as well.
Video Ads On the Rise
As Q4 progressed, more brands experimented with new video ad formats. Video ads as a percent of total ads served by Brand Networks jumped up from 9.54 percent in September to 22.52 percent in December, as advertisers raced to create and deliver compelling video content into the mobile feeds of Instagram users during the holidays.
“Video advertising on Instagram is rising to prominence incredibly quickly,” said Tedford. “Over the past six months, we’ve learned that users are willing to increase their time spent interacting with a brand when shown a short video clip. This is a game changer for brands, as competition for eyeballs continues to increase on the platform. Brands who can offer this compelling video content stand out from the crowd and leave a lasting impression on the viewer.”
Instagram Played a Key Role in the Year’s Top Shopping Dates
As the holidays drew near, Instagram ads delivered by Brand Networks’ clients and users witnessed a burst of activity, with five dates standing out as key moments in the fight for Instagram user attention:
- EARLY NOVEMBER: 11/10/2015 – Early November marks the start of a noticeable increase in spend for advertisers with content ranging from holiday posts to Black Friday sneak peeks. One Fashion advertiser used this date as an opportunity to get a head start by reaching over 1,000,000 global users in a single day.
- BLACK FRIDAY: 11/27/2015 – Retail advertisers served 7.5 million impressions on Black Friday with Brand Networks, more than twice November’s daily average of 3.3 million. Meanwhile, CPG advertisers focused on the three days leading up to Black Friday, with that time frame accounting for 25 percent of November’s impressions within the vertical.
- CYBER MONDAY: 11/30/2015 – The biggest online shopping day of the year was all about video advertising, at least on Instagram. An impressive 91.5 percent of Cyber Monday’s 1.4 million Retail impressions served by Brand Networks were a result of video ads.
- GREEN MONDAY: 12/14/2015 – Holiday advertisers across verticals moved away from brand awareness toward direct response strategies for Green Monday, focusing on clickable ads as the holiday shopping season wound down. Nearly 90 percent of all impressions on Green Monday came from clickable ads driving users to learn more and buy.
- FREE SHIPPING DAY: 12/18/2015 – Consumers weren’t the only ones saving big on Free Shipping Day this year. Fashion brands got a good deal, too, as the average CPM for this vertical dropped to $3.68, nearly 50 percent less than the prior week’s daily average of $6.79.
As interest in the platform continues to rise throughout the next year, Brand Networks expects impressions served on these key shopping dates to nearly triple in 2016.
Download Brand Networks’ full report, Instagram Ads: A Picture of Growth, for an in-depth, visual representation of six months of advertising through the Instagram Ads API.
ABOUT BRAND NETWORKS
Founded in 2006, Brand Networks delivers relevance-driven native social advertising and content marketing to 650 enterprise customers, including half of the Fortune 100 and 17 of AdAge’s 25 Most Advertised Brands. The Brand Networks Platform is the world’s first cross-platform social marketing software with a relevance engine at its core, designed to help marketers achieve the highest possible levels of effectiveness and efficiency across paid, earned and owned channels, at every stage of the social marketing process. Brand Networks is headquartered in Boston with offices in San Francisco, New York City, Rochester, Los Angeles, Chicago, and Sydney. For more information, please visit bn.co.