UPDATE: Aug. 25, 2021: Instagram is bringing ads to its Shop feature globally, the Facebook-owned app announced a few weeks after it began piloting the ads with select U.S. brands.
Dive Brief:
- Instagram began testing ads in its Shop tab on Aug. 9 from a select number of U.S. brands, per details emailed to sister publication Marketing Dive.
- The ads appear as tiles in the app, allowing users to click on items and discover more about the brand. Testing the product is currently limited to several U.S. advertisers, including luggage retailer Away, pet brand Boo Oh, Clare Paint, Deux and Donni Davy.
- The debut of ads in its Shop tab are intended to strengthen Instagram's main e-commerce offering, a move that indicates how the online shopping space is heating up, especially for mobile-facing social media companies.
Dive Insight:
The latest update from Instagram sees the company building out its e-commerce capabilities as it looks to become a stronger contender in the space. Instagram initially rolled out Shop last July in order to provide businesses a centralized selling platform, diverting from previous efforts that required users to follow brands, retailers or influencers in order to browse shoppable posts and stories.
The inclusion of ads on Instagram Shop could also streamline the process of product discovery for mobile marketers. By clicking on an ad tile, a user will be brought to the Product Details Page, which will also display additional items that users can save or share with friends through Instagram's core communicative technology. The ease in which items can be browsed and passed around is one of Instagram's main selling points to potential vendors.
The e-commerce expansion arrives as Instagram looks to grow in multiple spaces, particularly shopping. Last October, the company introduced shopping features to short videos through its Reels platform and livestreams through IGTV. Adam Mosseri, head of Instagram, further explained the company's motives in a video last month, explaining that it is "no longer a photo-sharing app."
The timing of Instagram's new feature is also notable, given that back-to-school season is beginning and e-commerce is poised to play a significant role. While the brands currently testing the product are mainly non-school-related vendors, Instagram has plans to expand to other advertisers over the next several months, as confirmed to TechCrunch.
As Instagram tries to strengthen its standing in the e-commerce space, so are other social media platforms. TikTok this month announced a partnership with Publicis, which could potentially bring on many of the agency's blue-chip marketers to the platform. Snap is also deepening its e-commerce investment through a recent acquisition of Fit Analytics, a sizing tech company, as the photo-sharing app looks to lean into its AR capabilities to drive its e-commerce business.
Instagram parent company Facebook continues to drive ad revenue through its own platform, having experienced a 56% year over year rise in the second quarter, per an earnings call last month. Still, obstacles in tracking — namely Apple's IDFA changes — could impede Facebook's ad business, which may help to explain why it's seeking to evolve into a "metaverse company" in order to meet consumers' increasing interest in digital channels, including e-commerce.
