Publishers Aren't Seeing Revenue From Instagram's New Ads
January 11 2017 - 5:55PM
Dow Jones News
By Mike Shields
For publishers Instagram Stories are, for now, the
anti-Discover.
Unlike Snapchat's ultra -exclusive Discover platform, which is
limited to a few dozen partners who commit to creating unique
content on a daily basis, any media company can set up an Instagram
Stories account.
And while Snapchat's partners get a piece of the ad revenue
generated on their Discover channels, publishers as of now are not
getting any revenue cut from Instagram Stories, which just rolled
out its first advertising on Wednesday.
Most publishers told CMO Today they are patient, as they expect
Instagram to eventually share ad revenue or create some other form
of ad revenue for Stories.
A spokeswoman for Instagram, which is owned by Facebook Inc.,
said the company has no comment on how the Stories business model
may evolve.
In the meantime, publishers see a growing opportunity to weave
marketers' messages into their Story content. Currently, publishers
are permitted to charge marketers for this "sponsored content" and
keep all the revenue.
The new Instagram Stories ads sold by Instagram are very
Snapchat like: the placements are full screen vertical videos that
can run for 15-seconds, or static photos that run for five seconds.
The charter list of advertisers includes L'Oreal, Bacardi,
McDonald's and Wendy's, Instagram said.
To be sure, Instagram only launched the Stories product last
summer, and only so many publishers have committed to regularly
creating content for the service. That content ranges from an
occasional behind-the-scenes image from a photoshoot to snippets of
interviews with celebrities, like the ones recently posted by by
Entertainment Weekly on Alec Baldwin and the cast of ABC's
"Blackish."
Instagram said Wednesday that Stories now reaches an astonishing
150 million people a day (the same number that use Snapchat on a
daily basis).
James Quarles, vice president of Instagram Business, said that
one third of the most-viewed Stories to date come from businesses,
including media companies.
"Publishers are great Stories creators," he said. "They have so
many great content assets."
Brian Sugar, co-founder and chief executive of women-centric
content company PopSugar Inc., raved about the viewership the
company is seeing via Instagram Stories, and said he was confident
a viable business will emerge.
"Somehow publishers must see value in producing content for
these platforms," he said.
Indeed, producing content for any social platform consistently
takes time and resources. Brian Goldberg, chief executive at the
women-aimed digital outlet Bustle, noted that producing such
content is "not simple" and is different from shooting photos that
can be used in Instagram's traditional feed.
"It's still really early days on Instagram," he said. "It really
helps publishers build their brand. It's not yet at the center of
our revenue strategy."
Mr. Goldberg said that Bustle's audience on Instagram has surged
from 200,000 to close to 1.4 million over the past year. That
should make the publisher's Instagram Stories appealing to brands
looking to do sponsored content.
"The fact that they opened the door with ads should lead to more
things down the road," Mr. Goldberg added.
One publishing executive said he was surprised that Instagram
didn't launch a revenue share program for Stories as part of the ad
rollout, simply to put pressure on Snapchat. Another top media
executive said she thought it would be a matter of time.
Philippe von Borries, co-founder and co-chief executive of
Refinery29 said that, historically, Instagram has followed
Facebook's lead when it comes to ad products. Given that Facebook
has started testing mid-roll ads in videos, that could signal a
similar move by Instagram down the road.
In the meantime, Mr. von Borries is also bullish on the creative
potential for doing Stories on behalf of paying marketers.
"Instagram Stories are a lot more organic, and the content tends
to be very loose and experimental," he said. I don't think anyone
is up in arms [about monetization]."
Write to Mike Shields at mike.shields@wsj.com
(END) Dow Jones Newswires
January 11, 2017 17:40 ET (22:40 GMT)
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