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The First Instagram Ad "Worked," But What Do Brands Do Now?

The numbers say that Michael Kors’s much derided Instagram ad—the first of its kind—was a success. But how, if at all, can brands really use Instagram effectively as a paid ad platform?

  • <p><a href="http://instagram.com/p/gLYVDzHLvn/" target="_blank">Michael Kors</a></p>
  • <p><a href="http://instagram.com/p/gTPEyBxP97/" target="_blank">GE</a></p>
  • <p><a href="http://instagram.com/burberry" target="_blank">Burberry</a></p>
  • <p><a href="http://instagram.com/levis" target="_blank">Levi's</a></p>
  • <p><a href="http://instagram.com/adidas" target="_blank">Adidas</a></p>
  • <p><a href="http://instagram.com/benandjerrys" target="_blank">Ben & Jerry's</a></p>

When it first appeared, it was just like every other photo in your feed. Or was it? A cup of tea, a smattering of multi-colored macarons, and a snapshot of Notre Dame sit in blurred focus around a beautiful gold watch. The caption reads, "Pampered in Paris #MKTimeless."

If you didn’t bat an eye, you're either a regular for tea at the Plaza or have no problem with the arrival of paid advertising on Instagram. While brands have been on the social photo network almost since the beginning, until now their accounts were the same as yours. Take photo, filter photo, type caption, post for followers, repeat. Starting with that first Michael Kors sponsored post, brands are now able to pay for the luxury of having their posts pushed out to targeted users who may be interested—based on their feeds—in seeing what they have to offer. Michael Kors was the first out of the gate, with General Electric fast on its heels, and there are eight other marketers poised to post, including Adidas, Ben & Jerry's, Burberry, Levi's, Lexus, Macy's, PayPal and Starwood, already all avid Instagram users.

The introduction of sponsored posts poses some compelling questions about the platform, its users, and the marketers trying to capitalize on it. Among them: will users just get used to seeing ads, like on Facebook and Twitter, and continue the committed engagement they're known for? Can Instagram convince advertisers that paying for sponsored posts will deliver more impact than what they’ve already been able to do for free? And what’s the difference between the value of earned attention and paid attention, and how will that change a brand’s relationship with its audience?

"It’s an interesting situation because we’ve spent a lot of hours and a lot of dollars creating content for Instagram," says Benjamin Palmer, co-founder and chairman of The Barbarian Group, which works with GE and has explored new content platforms and formats for the brand. "A lot of people have put a lot of energy into carefully earning people’s attention. Now that little ‘sponsored’ mark next to your post is going to mean something different to different people."

Lauren Tetuan, group digital media director Deutsch LA, which does work for Taco Bell, says Instagram differs from other platforms because it is a much more personal space, both in the content shared and the real estate available to share it. "It’s all around photos of what people find visually beautiful and it hasn’t lent itself as naturally as some of the other networks as a marketing platform," she says. "For the Michael Kors ad, if you look at all the negative comments, a lot were just against any ads while others were complaining about having this luxury brand in their feed. I think initially the criticism will be of ads in general, but more important is targeting the right people."

One look at the metrics rolling in on the Michael Kors effort will put a smile on both the brand’s and Instagram’s face—a much-quoted report from Nitrogram found that the brand gained 33,000 new followers in the wake of the ad (16 times more than usual) and the ad generated 370% more likes than Kors's last five posts—but the comments under it and the GE sponsored post suggest people aren't crazy about ads showing up at all, or that targeting isn’t firing on all cylinders just yet, or both. Brands that have already been working carefully to attract hundreds of thousands of followers may be wary of an impending tidal wave of negativity if they’re suddenly blasting out posts to people who don’t care about Ralph Lauren. "If we use recent history as our guide, it took a bit of adjustment from both consumers and marketers to get comfortable with advertising on Facebook and Twitter in its earlier days," says Sarah Hofstetter, U.S. CEO of 360i, which has worked with Oreo on its successful content/social media efforts. "But with time and optimization, each platform found a balanced role for both marketers and consumers alike."

And let’s face it, a lot of it is subjective. For anyone who digs science and engineering, chances are you’re actually going to really like what GE posts more than, say, insufferable rich kids and funeral selfies.

"On other platforms people have, to some extent, gotten used to seeing ads," says Nathaniel Perez, global social media lead at SapientNitro. "Their brains are used to separating the signal from the noise. Instagram is a very low-noise medium because whatever isn’t visually appealing sinks. Your advertising has to be relevant there. The form of the communication is totally visual and that forces you to comply to the standards driven by the audience and the users."

The biggest challenge for brands, says Tetuan, "is to actually create a visual that is up to standards but isn’t too brand heavy and maintains either an entertaining or useful quality, or just is interesting to users without pushing the brand too much." And that's great advice for brands who are voluntarily followed on Instagram. For advertisers who buy their way into people's way, though, the question is whether any amount of creative finesse will outweigh user resentment that they're there at all.

Much of the chatter around Instagram’s ad platform, at least among users, has been the debate of whether or not it should exist at all. But what could emerge as a much bigger issue is that the platform is not actually robust enough to make it worth it for brands it's trying to pitch or users it's trying to attract. Advertisers are spending significantly to acquire followers and build a presence on Instagram and, for many, it’s all about image and engagement. But for others, particularly retail brands, it still lacks functionality to deliver any direct return on that investment.

"If I was the Gap or another clothing retailer, I’d pay $25,000 a month to have a pro account where I could post photos that can directly lead people to buy that item," says Palmer, echoing sentiments also voiced by fashion bloggers. "It would’ve been cooler if they put a store in there or a shopping platform. That would’ve been an innovation instead of an interruption."

Right now the company says it has no immediate plans to offer links or any other features that will take users out of the app. Its short-term focus is on honing targeting so a well-placed sponsored post resembles an older, much more familiar form of interruption—a print ad in your favorite magazine.

Ultimately, Hofstetter says, it comes down to currency and value exchange. "It’s about what kind of content brands will provide to consumers that will inspire them to give back to the brand, whether in the form of advocacy, sharing, or purchase."