Another very favorable trend we might consider is the convergence of marketing and content. Brands are increasingly seeking to create content that engages users by communicating a story by and coming off more authentic than a traditional ad. So far, Instagram has proven to be one of the best channels for brands to create and disseminate original and organic content. <\/span><\/p>\n User Growth and Usage\u00a0Metrics Show the App is Deeply Engaging<\/b><\/p>\n When Facebook acquired Instagram in 2012, the app had 30 million users. Since then, the user base has grown over 10x, with 500 million total users and 300 million daily active users[2]<\/span>. This growth has been achieved on a global scale; 80% of Instagram\u2019s users are outside of the US[3]<\/span>. Daily engagement metrics are equally impressive: users spend an average of 25 minutes on the app per day[4]<\/span>. Clearly, there is a strong value proposition for users. <\/span><\/p>\n Value Creation is Also Real for Brands<\/b><\/p>\n Instagram offers a compelling value proposition for advertisers as well. First, it is very simple and easy to use. It takes just a couple of minutes for a company to set up a profile. Moreover, the content format (pictures and short videos) makes it easy for advertisers to create new content with low production costs. This is why Instagram is especially valuable\u00a0for SMBs; they have limited resources and little experience with formal advertising. Instagram is an attractive\u00a0option for brands, large and small, when compared to more complicated alternatives. \u00a0<\/span><\/p>\n Perhaps most importantly, ads on Instagram have proven to be very effective. The ads are seamlessly embedded within users\u2019 feeds. The over 500,000 brands on the platform can choose between photo, video, and carousel ads. Advertisers, especially retail brands, are seeing impressive levels of user engagement. Approximately 50% of Instagram users follow at least one company, the majority of top performing Instagram posts feature a retail product, and 75% of users perform an action after seeing an ad on the platform<\/em>[5]<\/span>. It’s hard to say definitively due to lack of comparison data, but Instagram likely leads the mobile industry in terms of user\/ad\u00a0engagement. The chart below shows how engagement levels on Instagram compare to those on other platforms.<\/span><\/p>\n <\/p>\n \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Source: TrackMaven<\/span><\/p>\n Instagram also provides rich data analytics to brands, which allows them to quickly analyze the success metrics of campaigns they run. This is particularly valuable for less sophisticated businesses. Given all of the preceding factors, Instagram may have the strongest value proposition for mobile advertisers today. \u00a0<\/span><\/p>\n Monetization Has Been Surprisingly Successful<\/b><\/p>\n Instagram\u2019s captures value by charging brands for advertising on the platform, similar its parent company, Facebook. Instagram started monetizing in September 2015[6]<\/span>, and in this short time its sales have skyrocketed. Some estimate that Instagram comprises up to 10% of Facebook\u2019s total revenue<\/span>–very impressive just a year and a half after monetizing began[7]. While Facebook does not breakout Instagram revenues in its filings, we know that the mobile trend is still going strong: Facebook\u2019s mobile revenue now makes up 84% of ad revenue, compared to 78% approximately year prior (mobile revenue was $7.3 billion in Q4 2016)[8]<\/span>. <\/span><\/p>\n Instagram Has Made the Transition to Platform<\/b><\/p>\n Now that Instagram has proven its value proposition to advertisers, it has successfully transitioned from a product to a platform company. Advertisers sit on one side of the platform, while consumers sit on another. And the cross-side network effects are very strong. We know that the most successful companies of today are platforms, and that, largely due to network effects, platform companies tend to “tip” the market in their favor. Given its above-market user growth, success with advertisers, and successful transition to a platform, it sure looks like Instagram is positioned to win mobile advertising.\u00a0<\/span><\/p>\n Sources:<\/p>\n Instagram has become an effective channel for advertisers and is quickly emerging as the leading platform in mobile advertising.<\/p>\n","protected":false},"author":564,"featured_media":3108,"comment_status":"open","ping_status":"closed","template":"","categories":[658,261,140,7],"class_list":["post-3107","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-advertising","category-instagram","category-mobile","category-winner"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-losers\/","yoast_head":"\n![\"Screen](\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/02\/Screen-Shot-2017-02-02-at-12.34.00-AM-1024x640.png\")
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