Matt Jacobson has been at Facebook for 10 years. He was Facebook employee number eight back in the days when Mark Zuckerberg, Facebook founder and CEO, couldn’t afford to pay people wages so instead offered them equity. Something Jacobson is probably pretty happy about now.
Now Jacobson is running Instagram. As head of growth for the photo-sharing app, he is driving its transition from a free-to- use, ad-free platform into a revenue-driving operation.
Instagram now counts 4 million users in Australia – about a quarter of the number of Facebook users here.
Just under six months on from launching paid ads in Australia, it’s seeing the first results come in and it’s pretty pleased with itself.
Jacobson – as Facebook always is – was cagey about sharing real dollar figures for exactly what brands are paying to run ads on the service, and what they are delivering in terms of ROI. Many are thought to be the result of contra deals, so that Facebook can build up a portfolio of case studies for advertisers down the track. L’Oréal, one of the first brands to use the paid ads, and one of the first to trial video ads, is happy to share its results, having found that a campaign for Maybelline here outperformed the same campaign run in the US.
In the US, Mercedes used Instagram to launch its new GLA sports utility vehicle – tapping up Instagram influencers to document their travels in the vehicle, and combining that with Facebook advertising to drive consumers through the purchase funnel, to take a test drive and go to the dealer.
“It’s good to have a brand validate it,” says Jacobson, adding that it was so successful for Mercedes that it has changed the way it launches all new models to adopt Instagram and Facebook together.
Six months since launching ads, only 20 brand campaigns have run – so has it turned down brands that don’t fit with its view of what it wants in an advertiser? Yes. But only if the advertiser’s objectives didn’t match what it could offer, Jacobson claims. So if a brand wants to push a competition for signups, that isn’t Instagram appropriate so it won’t get through.
“One of the things that’s been really key for us is the simplicity of the product; the acknowledgement and embracing of the community of photographers is really as important as driving business results for brands,” says Jacobson, airing Instagram’s caution over rushing its commercial agenda. It is keenly aware of the backlash that Facebook hit in its early days, and of the limits Instagram still has. Tracking direct response from Instagram isn’t possible – it’s more about reach and raising awareness.
Sophie Blachford, who heads up Instagram in Australia, says: “Instagram is really great for awareness and inspiration, but there are no clickable links, so if an advertiser is focused on cost per acquisition, you can’t track that [on Instagram].”
Clickable links would change the dynamics of Instagram entirely, giving it a route into e-commerce, something Jacobson thinks is the most exciting opportunity in the Australian market, and a sure sign that top of his mind is the development of Instagram’s role in online shopping – even though he won’t overtly say so.
“E-commerce in Australia is really interesting because it’s a really mature market where e-commerce is still an emerging opportunity, which I don’t think you see anywhere else in the developed world. It’s just starting now. It’s really exciting. There’s learnings that have come out [from the US and UK] about how to leverage platforms like Instagram to drive awareness, and then tools like Facebook to convert that intent is really interesting and powerful to me.”
It’s an obvious goldmine for Instagram and for brands, shifting it from a branding channel to a revenue driver. Closing the loop between ads, visual storytelling and converting that into sales is high on the agenda for brands like L’Oréal and in the fashion space. A few years ago Facebook commerce – dubbed F-Commerce – was heralded by some in the UK and US as the next big thing in retail and social media. It failed to transpire in any significant way because that wasn’t what people were on Facebook for.
Fast forward a few years and it’s exactly what people are using Instagram for, it’s a natural evolution to be able to buy products you’ve already liked.
Jacobson was cagey about if and when e-commerce would be built into Instagram. But it is surely coming. Until then, retailers and brands are finding their own ‘hacks’ to do it. David Jones offers ShopInsta, Myer and others use Like2Buy to redirect users to their own e-commerce pages featuring the products they have shared via Instagram. It pre-populates a ‘wish list’ of items that individual users have ‘liked’ from the retailer’s Instagram account – giving an easy route to buy.
Many more users sign up to Like To Know It – a service that emails followers the e-commerce links for products they like posted by bloggers on Instagram.
It makes sense for Instagram to get into the space itself and follow both natural user behaviour – and a demand from commercial partners.
“[E-commerce] obviously is something worth thinking about, and looking at and understanding, as well as the mechanics of how you introduce that, because it changes the user experience – does it add value or not?”
So, Instagram’s sticking to the line that it won’t rush into advertising or overrun the platform with paid posts, nor will it leap into e-commerce quite yet, but time moves fast in Silicon Valley.
“If you look at the world like Facebook years are like dog years, it happened so fast – a 12-month roadmap doesn’t exist in our world. It’s very dynamic and that’s what makes it interesting. It’s really a blessing to be able to see what happened with Facebook and how we launched it globally – and now we get to do it again with Instagram.”
This story first appeared in the AdNews print edition on the 20 March 2015.
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