Instagram

Overview

On June 26, 2019, Instagram introduced “Bringing Ads to Explore, Instagram’s Discovery Destination.” Instagram’s new explore ads seek to expand their offerings to advertisers looking for a larger reach while maintaining cultural relevance and brand credibility. We expect Explore to start rolling out as a placement in August 2019.

How it Works

Instagram’s explore page is where people go when they want to see photos and videos related to their interests from accounts they may not otherwise see on their main feeds. It is great for shopping, discovering and connecting with various brands and creators. According to Instagram, more than 50% of accounts on Instagram use Explore every month. Since Instagram now touts 1 billion monthly users, this translates to 500 million people using Explore – about twice the total users of Twitter and Pinterest, and over 180 million more people than use Snapchat.  

Instagram is investing more into Explore by connecting brands to buyers through a new ad placement opportunity for advertisers. This update seeks to enhance the Instagram experience by allowing users to connect with unique and exciting content while also being introduced to brands that align with their interests. In order to stand out on the Explore page, brands need to push content that attractive and trendsetting.

Impact

Organic Reach Will Continue to Decline:
Explore previously offered a strong opportunity for content to appear organically. While there are no official statements on the decline of organic reach from Facebook, we can make some assumptions based on Facebook history and feed consumption habits. As Facebook continued to grow and the feed became too crowded for anyone to digest information, Facebook began updating algorithms to serve users more relevant content. The result was a decline in organic reach, especially from content consumers weren’t engaging with, which ultimately is a lot of brand content.

Due to these changes, organic reach on Facebook declined from 16% in 2012 to 2.27% in 2015. Incidentally, 2012 was also the year Facebook hit 1 billion users, the same number Instagram currently has. It is logical that Instagram would follow a similar trajectory as the feed becomes more competitive.

Further, Instagram has a unique point of differentiation from Facebook in 2012 – Stories. Stories consumption grew 15x faster than feed in 2018. There is another place to compete for attention, and another reason to turn users away from solely the feed. However, Stories also present brands with a unique opportunity.

Stories Allow Brands to Continue to Connect:
Stories present a unique opportunity for brands to connect organically (and through media) with consumers. As more attention is drawn away from organic content (in feed or Explore), Stories remain a compelling way to organically connect with an audience. However, if Stories continue at the growth trajectory we are currently seeing, they will ultimately also see a decline in organic reach, similar to feed.

Explore Will Help Grow Advertising Revenue for Instagram:
If 500 million people are spending time in Explore each month, it provides advertisers with a very strong opportunity to reach people where they are spending their time. Expanding placement across Facebook and Instagram has proven successful for most advertisers and adding an engaging placement to the mix will provide opportunities for additional reach, clicks, sales, etc. Instagram revenue continues to grow for Facebook. Revenue was $6.18 billion in 2018 (about 26% of total revenue) and is projected to be $15.65 billion in 2021, a 153% increase, accounting for 40% of total revenue. Explore will likely further increase this growth trajectory.

Only Strong Content Will Survive:
The one key difference between the Explore content experience vs. feed or Stories, is that it is a much more competitive content experience. Feed shows one post at a time, taking up the majority of the screen. Stories take up 100% of the screen and show one ad at a time. Explore, however, shows 2-3 posts across and 4+ posts down, meaning you could be competing with 12 posts for a user to see your ad. Further, the Explore feed is made of content curated to the user. If I like beauty, it’s showing me beauty. If I like travel, it shows me travel. So not only are you competing with other content, but you are competing with content curated and personalized to the user, making it more difficult to stand out. Brands will have to think creatively to break through this space, and ensure all advertising is thoughtful, personalized and high quality.

The Bottom Line:
Ads in Explore give brands more opportunities to further connect on the platform. It will likely drive revenue growth for Instagram, but could be one of multiple factors impacting organic reach for brands.

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