Chris "Coz" Costello, Senior Director of Marketing Research @ Kenshoo
Instagram shopping features released. In recent news, Instagram has begun testing a new shopping feature that enables brands to add in-app checkout to their posts. This is Instagram’s first foray into direct shopping functionality and may help advertisers more clearly measure their ROI—and ultimately a desire to spend more.
Since early last year, Facebook has been talking quite a lot about how users are spending more and more time on their Instagram app and that advertisers are following. While the value for users has been clear—more visual engagement and less perceived noise from people or organizations outside of your circle—the value for advertisers has been in question.
Kenshoo clients manage over $1B in annual social spending across a wide range of advertisers, and because of that, we have been asked over and over about the impact of Instagram ads in light of this momentum.
For the most part, our answer borrowed from a classic Facebook relationship status: It’s complicated.
Instagram has reported as many as 1 billion monthly active users, but while that delivers a lot of eyeballs, the opportunity to interact directly with advertiser content is not as robust as the Facebook News Feed, particularly for short-form video content and the Stories format.
At its start, Instagram’s role in the classic conversion funnel was more about branding and awareness to activate and stimulate customer demand to do something else, whether that is engagement with another ad in the Facebook News Feed, or even in another channel.
Dynamic Ads for Products started to change that. Ads across entire product lines targeted at specific audiences debuted on Facebook, and its rapid adoption and acceptance for e-tailers was followed by the format being available on Instagram as well, sowing the seeds of a more direct experience.
But the mobile-only, full-screen feed of Instagram means users may be reluctant to click a link in an ad to go to another page to buy a product, versus continuing to scroll through their pictures and videos. At best, this might lead to a deferred conversion that could deny Instagram the credit it rightly deserved in driving the sale.
So taken on its own, Instagram may have been at a disadvantage when considering the ROI of the channel, even beyond just the more historical role of being an awareness driver. If the portion of sales originating with ads on the app that was not attributed back to those ads was larger than that of other channels, then Instagram would get the short end of the stick when evaluating the effectiveness of those campaigns.
That is, until now.
The announcement of in-app checkout—which lets Instagram users make purchases without leaving the app—for a small group of retailers in the U.S. could go a long way towards establishing Instagram not only as a branding powerhouse in the digital realm but also a direct driver of advertiser sales.
Check out the TechCrunch product demo of Instagram’s new shopping feature.
The key here with the Instagram shopping feature is that everything happens within the app. The inherent challenge of lots of digital ads is that they take you out of the moment. They disrupt whatever it is you were doing, whether that’s watching a video, catching up with friends, or being consciously or unconsciously influenced by celebrities (I’m told that’s a thing that happens now). You may be interested in the item being advertised, you may even want to buy it right now, but you don’t want to stop what you’re doing in order to make that purchase.
If this new checkout feature eliminates that disruption, then the response from users about Instagram shopping is likely to be pretty strong.
Right now, this is still a closed beta. There will be kinks to be worked out, and we will need to see just how receptive shoppers are to this new functionality. Most importantly, this feature applies to what are called shoppable posts, which are different from paid ads. But this is likely just the tip of the iceberg, with Facebook stating in its announcement to be “excited to introduce even more ways for people to enjoy shopping on Instagram this year.”
All of this points to giving more direct accountability to Instagram that could have ripple effects throughout the social advertising ecosystem for both earned and paid media. Ad pricing may change, putting it more in alignment with directly measurable returns. Whether that means those prices increase or decrease, though, is still entirely speculative.
What is clear is that an Instagram shopping path to purchase gives marketers one more way to close the loop with customers. This, in turn, means that It could very well mitigate the dropoff between branding and response channels, keeping customers in the purchase funnel when they previously may have fallen out. One way or the other, it will definitely raise the profile of Instagram ads even further.
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