Instagram Lets Brands Post 30-Second Videos, Offers a Takeover Unit as Its Ad Business Takes Off

Photo App Also Extends Landscape Format to Advertisers

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Execs from Instagram and its parent company Facebook have been modest, if not meek, when discussing the photo-sharing app's nearly two-year-old advertising business. "We've ramped really slowly, and we're very, very cautious," Facebook COO Sheryl Sandberg said during the company's earnings call in July in response to a question on the subject. It might be harder to keep projecting that attitude on the next earnings call.

After being very selective about which brands can buy ads, Instagram is opening to any advertiser and expanding the number of global markets in which it sells ads from 8 to 30 -- including Italy, Spain, India, Mexico and South Korea -- with worldwide availability coming by the end of the month. The service is also adding new ad formats, including its version of a site's home-page takeover, called a "marquee," and ones that take advantage of its new non-square formats.

"The purpose of the announcements is to let people know that we've moved from testing to a broad roll-out," said James Quarles, Instagram's global head of business and brand development.

That broader roll-out started in June, when Instagram said brands would be able to buy ads using the same targeting options and ad-buying tools they use to purchase Facebook ads. Instagram also added links to its ads so that brands could use them to get people to install an app or buy a product on the brand's site. Mr. Quarles wouldn't give broad numbers regarding how those ads are performing, but pointed to a couple specific examples.

E-commerce site Gilt Groupe saw an 85% increase in app installs when using Instagram's ads compared to ads running elsewhere, and British furniture design company Made.com measured a 10% increase in average order value. "We believe these are representative," Mr. Quarles said.

Also potentially representative are ad-buying firm Kenshoo's stats around Instagram's average ad prices, culled from more than 25 campaigns run through Kenshoo. According to the company, Instagram's ads, on average, cost $6.70 for every thousand impressions, $0.51 for every click and $6.30 for every app install. Kenshoo also said that people click on Instagram ads 2.48% of the time that they see them, which it said is two-and-a-half times the average for social ads.

The ad formats that Instagram rolled out in June may have appealed most to direct-response that it hadn't strongly courted before, but the new "marquee" ads seems aimed at its original base of brand advertisers.

The unit offers brands a guaranteed number of impressions as well as guaranteed placement toward the top of people's photo feeds. Brands will be able to buy these ads to target broad audience groups, typically based on an intended audience's age and gender, and there will be limitations on how many of these ads will be available per day, said Mr. Quarles, who declined to be more specific.

Fox will start running a campaign on Wednesday using the placement to promote the network's line-up of fall shows, according to an Instagram spokeswoman.

As for the new non-square ads, Instagram is making the landscape photo and video formats available to advertisers, but not the vertical versions. Mr. Quarles said that landscape "is more of a standard format" and aligns with the formats available for Facebook ads, in keeping with the idea of making it easier for people to set up their Facebook and Instagram campaigns using Facebook's ad-buying tools.

In addition to the wider format, Instagram is extending the length of brands' video ads from 15 seconds to 30 seconds and letting marketers add links to their ads that can open a dedicated landing page when clicked. The 30-second video lengths are not being extended to consumers "right now" because of technical limitations such as the longer time it would take to load the longer videos in people's feeds, Mr. Quarles said.

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