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How does Instagram sell its ad slots?

https://www.forbes.com/sites/gabrielshaoolian/2017/04/13/is-instagram-advertising-the-right-social-media-platform-for-your-brand/#4f06959a2d36

 

This article provides an overall introduction about Instagram’s audience, its ads selling strategies, and why it is working well. It points out that Instagram has a relatively young audience, more than half of whom age between 18 and 29. They have higher engagement with posts than users in other age groups. Also, Instagram places a great emphasis on photos and is highly visual, which benefits brands who have unique stories and identities. Such a characteristic makes fashion, beauty, and lifestyle brands early adopters of the platform, and data has shown that their strategies have been successful. 

It is interesting to see learn about Instagram’s ads selling strategy. We learned in class that Google is using a cost-per-click, or CPC, strategy for its advertisement slots. Brands pay companies like Google each time a user clicks. Google is also running second-price auctions for its ad slots. Brands have to be sure about the result and commit at the beginning when they offer their values. Unlike Google, Instagram is using a cost-per-“mille”, or 1000 impressions. It means that Instagram charges brands when it shows the ads to users. It is great for raising awareness and brand visibility. Since Instagram’s CPMs are estimated between $5-$6, they are relatively cheap. Brands don’t have to commit a big budget at the beginning if they just want to test the results, which is suitable for smaller brands who have limited budget. In addition, Instagram has a variety of ad forms, including videos, stories, photos, etc. It allows Instagram to charge a wide variety of brands at their most willing-to-pay price.

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