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T-Mobile Instagram

How Instagram is tapping into advertising dollars with video

By Dan Calladine, Head of Media Futures

February 5, 2016 | 4 min read

Instagram’s announcement that it will open up its feed to 60-second video ads is proof of just how much the platform is evolving, while hopefully bringing users with it. Just like Snapchat is no longer the ‘disappearing photos’ app - but now a portal where you can while away a lot of time looking at a large variety of content - Instagram is no longer just a photo app, either.

Instagram hit 400 million active users in September 2015, and if it maintains its rate of growth, is set to hit an impressive 500 million this summer. In keeping with other services like Snapchat, as well as Facebook and Twitter, Instagram is clearly taking steps to add more content for people to enjoy, even when their friends aren’t being that active.

Along with Facebook’s Instant Articles and Twitter’s Moments, Instagram too has just launched its Everyday Spotlights video compilations, where it highlights videos for people when they log in, such as clips from the Golden Globe Awards ceremony. It has also moved away from entirely square pictures, allowing users to post images and videos in portrait and landscape since August last year - offering greater creativity and flexibility.

If Instagram truly transforms itself into a platform where people actively go to watch videos, then introducing longer video ads is a sensible step. This also gives more control to advertisers, who are able to reuse pre-made ads, rather than tweak them to meet a specific time frame. And brands should definitely take note of this new feature, as research has already confirmed that ads on Instagram are effective.

A study from ad firm Nanigans, published towards the end of 2015, showed that ads on Instagram have a similar level of engagement to those on Facebook, and were successful at both driving interactions and goals, including in app installs.

For example, the first 60” ad that Instagram has chosen to show for T-Mobile, starring Drake, is both entertaining and perfect for its target audience, and will likely engage both users and brands looking to advertise on the platform. They have certainly set the bar very high for other advertisers.

That said, Instagram still has plenty of competition for mobile video ads, with many other platforms also offering inventory. However, the platform does have lots going for it as an ecosystem, including its scale and demographics – skewed younger and female. Another factor is that lots of accounts are very niche – for example cute animals or pictures of street food – so it’s somewhat easy to identify and target based on people’s interests. Easier, perhaps, than on Facebook.

It’s likely that ‘Instagrammers’ will get used to the longer ads very quickly as it’s easy enough to scroll through ones that don’t interest them. What is perhaps most interesting about this new feature however, is that it marks another turning point for Instagram, transforming it into a more fully rounded media entity, competing for attention with the abundance of apps on people’s phones.

Dan Calladine is head of media futures at Carat Global

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