How Instagram Combined Art and Commerce With Facebook’s Scale to Become an Advertising Powerhouse

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How Instagram Combined Art and Commerce With Facebook’s Scale to Become an Advertising Powerhouse

The app had to evolve quickly to get where it is today

JCrew goes beyond banner ads in this recent Instagram Story.

If Andy Warhol were alive today, there’s little doubt the godfather of pop art would be a master manipulator of social media. And the 20th century icon—who started out making print ads in the 1950s—would likely be drawn to, in particular, the image factory that is Instagram.

Instagram CEO and co-founder Kevin Systrom isn’t Andy Warhol reborn. However, both founded their own aesthetics-minded millhouse—one that’s led to the mass production of art, the other to the mass production of ads and filter-aided imagery from everyday folks. And while there’s no virtual assembly line for silkscreens per se, the app acquired by Facebook in 2012 has created a cultural conveyor belt for photos and videos that has taught brands to think far beyond banner ads. Harnessing Facebook’s ad-tech prowess, Systrom has essentially generated his own version of Warhol’s legendary studio, The Factory, building a machine-learning-juiced digital platform used by more than a million advertisers a month. (In September, monthly advertisers totaled 500,000, up from 200,000 in February 2016.)

“The community on Instagram is much more used to and accepting of advertising.”
-Jay Curley, senior global marketing manager, Ben & Jerry’s

“Kevin is a very unique super-entrepreneur who functions as an entrepreneur, but [he] also can get the very best out of a larger company he’s working with,” said Facebook COO Sheryl Sandberg. “There are a lot of people who can navigate organizations well and there are a lot of people who are great entrepreneurs. But that combination of someone being truly exceptional in both is very unusual.”

As is well known, the app has grown rapidly and now has 700 million monthly users, with 200 million of them engaging with vertical videos every day via Instagram Stories. But what’s less known is how the platform had to change at break-neck speed to get to where it is today.

Shortly before rolling out Stories in August, Instagram decided to revise the company mission, landing on the phrase “strengthening relationships through shared experiences.” While it might not sound like much, that mantra allowed the app to expand to become a place for users to post not just highlights, but to share the rest of their day, paving the way for Stories, for Instagram Live video and for whatever else the increasingly diversified digital product company has yet to announce.

Systrom compares his approach to Instagram’s identity to that of another tech behemoth. “Apple is not about being a personal computer company,” he said. “It is about devices in general and the way that humans interact with electronics in general and about great design. And lots of stuff falls under that category, not just simply a personal computer.”

The new mission statement also allows Instagram to more directly compete with rival Snapchat, which pioneered and popularized Stories-style vertical video. (“All airplanes look roughly the same,” Systrom said when asked about the comparisons. “But it’s the inside and the service that matters.”)

The advertising rollout for Stories has been notably faster than it was for the newsfeed, underscoring Instagram’s acceleration on all fronts. When Systrom’s staff introduced its first ad units in 2014—promising “engaging, high-quality ads”—it took between six and ninth months before systems were fully up and running after alpha and beta tests. However, his ad product developers have cut the process down to as little as two months, while rolling out several features every quarter.

“The community on Instagram is much more used to and accepting of advertising, and that’s good in a sense,” said Jay Curley, senior global marketing manager for Ben & Jerry’s. “It also means as someone checks their newsfeed for three minutes, you’re going to be one of 10 ads that they see.”

To Curley’s last point, with Instagram producing ads at a scale that can seem like saturation, brands’ relationship status with the social platform can often be categorized as “it’s complicated.” For instance, a Socialbakers study last month found that brands on Instagram garnered three times more engagement than Facebook. Then Animoto, an online video company, reported that 63 percent of the consumers it surveyed in April said watching a Facebook video influenced a purchasing decision, while only 26 percent said the same for Instagram.

Stories, meanwhile, represents a new kind of canvas to help brands maintain ongoing conversations with Instagram users that could drive sales. Beta advertisers like LG and Nike said they’re pleased with the results they’ve seen so far. “For Nike, it has far more reach, but it’s just a platform to feel a bit more immediate and looser,” said Ned Lampert, creative director at space150, the swoosh’s ad agency.

Next week at Cannes, Instagram will build a studio where artists and photographers will teach brands to create more engaging Stories.

Indeed, Systrom and his team have seemingly fostered a Warholian marketing platform that’s picture perfect for the speed of the 21st century. The main question remaining is, can advertisers keep up?

“It’s allowing us to be a little more spontaneous with the content we create,” said Frederic Bonn, ecd at digital agency iCrossing. “But as a brand, you still need to be true to what you are.”