Last week Instagram activated its API application programming interface for advertisements. There wasn’t much reaction at all about the news except in the tech world. In lay man terms switching on API for ads means that ads can now be purchased on Instagram by using online tools offered by official Instagram partners. People outside the tech world didn’t understand that switching on API for ads translates to billions in revenue. Instagram’s current mobile ad revenue is $595 million a year which is expected to shoot up to 2.8 billion by 2017. It is expected to leave behind giants like Google and Twitter in the mobile ad revenue race. The image based social media network has already overtaken Twitter and Linkedin in terms of active users. Instagram users are also a much younger demographic than other social media channels. 44 percent of the users on Instagram belong to the age group of 18 to 29, whereas only 23 percent on Facebook and 33 percent on Twitter fall in that age group. Reaching millennials and youth in general has never been an easy task, advertisers have to be able to relate to their sensibilities. Thus Instagram has had a very cautious approach while rolling out advertisements. They have tested the waters with photo based ads in 2013 and video ad in 2014. The advertisements are very similar looking to the ordinary pictures being posted on Instagram, except they include a small “sponsored” disclaimer, which is the only distinguishing feature between the two.
The users were much more receptive to these ads as compared to the traditional format and they received 2.8 times higher recall. However up until last week companies had to pay a minimum of $200000 to purchase ads on Instagram also the process for the final approval was long and tedious. With the activation of API, ads can be purchased by anyone using online ad-buying tools sold by official Instagram partners. This basically gives the advertisers the ability to be able to automate and scale the process, it also allows them to compare the results in comparison to the ads bought on other social media networks like Facebook and Twitter. Experts are calling it “one of the most anticipated moments in the evolution of advertising.” Users post 70 million images on Instagram daily, if Instagram finds a way to please the users and advertisers at the same time, the experts might just be right calling it the next big thing in advertising.