“Your Instagram Feed is About to Have More Ads From Influencers”
Article: https://www.nytimes.com/2019/06/04/technology/instagram-ads-influencers.html
The NYT article entitled “Your Instagram Feed is About to Have More Ads From Influencers” published by Emily Rueb details the changes being made to Instagram’s advertising strategy, which will manifest in more sponsored posts and advertisements from influencers.
The article mentions that Instagram, a Facebook-owned platform that promotes photo sharing and direct messaging, will now allow “brands to promote influencer-created content in people’s feeds, even if those people do not follow the influencer’s account” (Rueb, 2019).
Brands use sponsored content to share their brand’s story through an influencer’s voice, reaching new audiences and measuring the impact. Now, with Instagram’s updated advertising strategy, brands will have the power to reach audiences beyond the scope of people who follow either the influencer or the brand itself. This gives brands unprecedented reach when it comes to targeted advertisement.
Instagram maintains that the change in advertising strategy stems from brands’ desires to offer a more tailored and organic advertisement experience. This change may prove to be very beneficial for the brands that are advertising and for Instagram’s ad revenue, as “68 percent of its regular users say they come to the platform to interact with ‘creators’” (Rueb, 2019).
This article relates to our current class discussion of the web. Instagram exemplifies the linked structure of the web, as each Instagram profile and image has its own web page, which can link to other photos, accounts, and websites (Chapter 13). We can reason about such a vast network of pages by thinking of each one as a node with directed edges to other nodes (pages). In this way, Instagram forms large web of interconnected nodes, forming paths between pages with directed edges to one another.
But beyond just the structure of Instagram, the platform employs a very potent strategy for revenue generation that relates to our class discussion of advertising (Chapter 15).
There are several different methods that can be used to advertise on the Web. For instance, there is keyword-based advertising, which prompts ads related to keywords typed into search engines. Keyword-based advertising is widely used by search engine platforms such as Google, Yahoo!, and Bing.
A method that Instagram employs is the cost-per-click (CPC) model that is mentioned in Chapter 15.1. This model holds that advertisers only pay a fee when a user clicks on an ad; on Instagram, the ad can be in the form of a sponsored post which links to a product available for purchase. The textbook claims that a “click” often demonstrates greater interest than, say, simply a search query, which is why advertisers are willing to pay more for these advertisements. On Instagram, it is estimated that advertisers can pay up to $3 per click.
Though the cost of an advertisement is dependent upon many factors, an important determiner of price for ads on Instagram is auctions. Chapter 15.1 maintains that platforms solicit bids from advertisers to gauge how much value a certain advertising space holds. These auctions are somewhat complicated, as “there are multiple slots for displaying ads, and some are more valuable than others” (Easley & Kleingerg, 2010, p. 440). To help navigate this complexity, advertisers, their valuations for ad slots, and the slots themselves can be arranged in a matching market. As the prices for the slots rise incrementally, the advertisers’ valuations for the slots decrease, and after multiple iterations of auction algorithms (discussed previously Chapter 10), equilibrium is reached.
This generalization can be applied to Instagram’s ad auction process, though perhaps Instagram’s auctions are a bit more complicated. However, in the broad sense of the Web, it is important to learn about such advertising structures and procedures to better understand the value of targeted ads. In today’s digital age, wherein the grand majority of revenue of tech giants such as Google and Facebook comes from advertisements, navigating this field requires a concrete understanding of sponsored search markets and digital advertising. Hopefully, platforms will choose to be increasingly transparent in their advertising models, so that users may be more aware of the ways in which they are being targeted.