The Instagram opportunity

Consider some numbers, exclusive to The Ken: India has close to 31 million users (aged over 13) on Instagram or nearly 5% of the social network’s overall user base (600 million as of February 2017). Dig deeper, and you will see a sweet spot emerging, with over half its Indian users (16 million) falling into the 18-24 or ‘millennial’ age category. For perspective, in September 2015, the network had only 4 million users in India. Over the last 18 months, it has managed to achieve nearly 8X growth, and almost all of it organically. According to AppAnnie, the total time spent on Instagram in India on Android phones rose from 17.8 billion hours in 2015 to 61.5 billion in 2016. (AppAnnie breaks its data down to quarters and provides data close to the latest quarter. In this case from Q4 2015 to Q4 2016)

Advertisers and brands are taking note.

Ad bundling

Over the last two years, Facebook has changed the way it pitches Instagram to advertisers.

“When it launched Instagram ads in India, back in September 2015, it had a hard time selling it to advertisers,” says a Gurugram-based digital marketing professional, on a condition of anonymity. “They were deemed expensive, nearly 5-6X of what people spent on Facebook for a similar reach. Say, if Facebook charged you Rs 50 per 1000 impressions, Instagram was priced at Rs 250-300 for a similar metric.”

The focus now is on bundling, or in agency-speak, ‘FB+Insta’. He adds, “Typically when a Facebook rep does his presentations, he pitches an Instagram-also option, which definitely helps in increasing reach and reducing our cost per impressions.” With the FB+Insta option available on Facebook’s advert manager dashboard, advertisers can buy additional reach by paying a little extra. What also works for Instagram is that if the creative on Facebook is of the same size, the ads automatically appear on its platform.

“Asia-Pacific, including India, is an important region for us,” said a Facebook India spokesperson in an emailed statement. “Since we opened advertising to businesses of all sizes two years ago, this region has seen strong results. We’re seeing significant marketer demand in business areas like e-commerce, technology, FMCG/CPG, retail, entertainment and gaming across APAC.”

Working with limitations

Instagram, advertisers say, has overtaken Twitter as the preferred number two platform for social media marketers in India. But there are some real pain-points for advertisers, both in terms of perception and execution.

As of today, Instagram offers only 3 or 4 ad formats to advertisers and publishers, which is in stark contrast to Facebook, where the options are multi-fold, nearly 10 or 11. Karthik Srinivasan, national lead, [email protected], says, “Instagram has limitations. It doesn’t appeal to major clients like say Infosys, which would still prefer Facebook and Twitter for its messaging. The only major content on Instagram, in this case, could be around employee branding.” Equally, the platform has a certain inflexibility about it. “It doesn’t cater to brands wanting to do quick follow campaigns or a quick shot boost, that brands often do, but build a community. This is unlike Facebook and Twitter,” he adds.

There’s a growing perception about Instagram being a ‘spoilt brat’s network’, presumably owing to its user profile. A September 2015 Nielsen study commissioned by Instagram indicates that over 50% of Indian Instagram users purchased products or services from the brands they followed. And being “avid travellers,” 50% of them took four vacations the past year.

However, what could really stop Instagram’s charge is if users abandon the platform and go elsewhere. Which is why, upon realising the potential threat from Snapchat, Instagram has managed to clone and integrate some of its best features. “As long as it still keeps attracting newer users to the platform, keeps engaging them, it will continue to grow. And advertisers will take notice. The digital pie is still open for everyone to win,” says the digital marketing professional.

Users aside, Instagram has minimal personnel presence in India. It doesn’t have a product team here or even for that matter, someone heading its operations. Its sales in India are managed by Facebook executives, who typically liaise with an agency or brand every quarter through presentations and one-on-one meetings. For the year ending March 2016, Facebook earned a revenue of Rs 177 crore from its operations. This includes Facebook and Instagram.

What’s worked for Instagram?

Needless to say, Facebook, particularly in India, has been careful about Instagram’s positioning. This reflects in its pitch to advertisers and brands, where it says that if you want to reach a young, urban, aspirational, high-on-lifestyle audience, Instagram is THE platform to tap. Curiously enough, this used to be Twitter’s strong point, but that has since faded away.

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