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A recent study by Brand Networks revealed that advertising on Instagram is working, with decreasing costs and increasing performance across industries. We spoke to Pedro Labarta, Brand Networks’s Managing Director for Mexico and Latin America, about what the study’s findings indicate about the best way to make use of this platform in advertising campaigns.

Advertisers are still figuring out the best way to make use of the different engagement tools that social media platforms provide. And the platforms themselves are constantly tweaking those tools according to new insight revealed in studies like that conducted by software and social network services provider Brand Networks, whose clients include Interpublic Group, WPP, American Express, AT&T, InBev, Discover, Yahoo! and Unilever.

Brand-Networks-LogoThe three-month study looked at two billion Instagram ad impressions and tracked metrics related to spending and performance in the first quarter of 2016. The highlights, with additional insight from Pedro Labarta, Brand Networks’ Managing Director for Mexico and Latin America, below.

For Best Ad Performance on Instagram, Turn to Video

One of the most interesting revelations from the study was that video ads made up an average of 58% of ad impressions over the first quarter. Breaking the numbers down month-to-month, the study found that video ad impressions rose steadily from 43% in January, 59% in February and 65% in March. These numbers are even more impressive if one considers that December 2015 video ads represented just over 30 percent of the total.

What accounts for this change? Instagram did extend the maximum length of videos from 30 to 60 seconds in the middle of Q1. While the Brand Networks team analyzed both long and short videos, there wasn’t a notable difference in performance based on ad length: “We’ve also witnessed advertisers on our platform deliver video ads that were much shorter that performed very well,” Labarta said.

Lower Costs, Increased Performance for Instagram Ads

Continuing to give good news, the study showed that average cost-per 1,000 impressions (CPM) dropped to $4.58 in January, an all-time low at the time. But the numbers kept falling, and in February the CPM reached $3.88. March brought it back up, but just slightly, to $4.19. Impressive, nonetheless, as average CPM was $7.04 in just Q2 of 2015.

The test revealed that the CPM dropped across industries, in some more notably than others. The technology sector’s CPM went down by 32%, education by 50%, automotive by 49%, and e-commerce by 29%. Only telecommunications and travel industries saw decreased cost efficiency, as the CPM went up by 6% in each.

Labarta revealed that Brand Networks has “seen a few industries adopt Instagram advertising more rapidly than others,” and that “retail, consumer packaged goods and high fashion industries have been among the most motivated verticals to test and learn on Instagram.” The fashion industry has been experimenting with new approaches to getting target audiences involved in Spring Fashion Week Events, and all signs point to video as its secret weapon. 90% of fashion impressions came from video, which explains why 71% of ad spending on Instagram in the industry go to video ads.

Comparing the different social channels today is a bit like comparing two different planets. The ecosystem on each is incredibly different. They are as different from one another as they are from television or radio.

Despite the decreased cost efficiency its ads have experienced, telecommunications brands “flocked” to Instagram in Q1 to support their sports-related ad campaigns during football and basketball seasons and new contract promotions, which explains the increased competition and CPMs.

Beautiful, Real-World Imagery Carries Platform’s Success

It’s very hard to compare strategies, advantages and disadvantages of the wide array of platforms available to advertisers. In fact, “comparing the different social channels today is a bit like comparing two different planets,” says Labarta. “The ecosystem on each is incredibly different. They are as different from one another as they are from television or radio.”

But in the end, Instagram arguably provides the best platform for visual communication, and is “very interesting because of its focus on beautiful and real-world imagery as a form of communication and expression,” says Labarta. An image or video’s ability to transcend language and culture makes it an undeniably powerful channel.

Join us at PORTADA Mexico!

descargaPedro Labarta is Managing Director Mexico and LATAM at Brand Networks. Brand Networks is a platform that helps brands to plan, optimize and automate paid and owned content through thousands of social points daily.Last May, Brand Networks acquired Social Adverting company Shift. Latin American and U.S Hispanic expansion is one of the major growth strategies in the coming years for Brand Networks. Portada interviewed Pedro Labarta, a veteran of Latin American Internet, to understand how he sees the digital evolution in the region and prospects for Brand Networks.

Portada: What are Brand Networks’ plans to expand in the region?
PL: “BN plans to expand aggresively in the region by first entering through Mexico, as it is one of the countries with highest penetration of social networks. We will then continue expanding in other markets such as Chile, Colombia, Argentina, Panama and Costa Rica.”

We will first establish a presence in Mexico and then continue expanding in other markets such as Chile, Colombia, Argentina, Panama and Costa Rica

Portada: What about the product range?  
PL: “BN has a single product as it is a platform for managing your social networks (Facebook, Twitter and Instagram), being the only platform that handles these three social networks in LatAm for management and operation. For the time being, the whole operation will be managed from Mexico to the rest of Latam, where we are building a team that gives 24/7 support to customers in their language.”

Portada: Do you see ad-blocking as a positive trend for social media advertising?
PL: We see ad-blocking as a way of getting stronger, working with social network leaders, knowing that we can work organically to avoid ad blocking and  continue working with FB, TW, Instagram and Pinterest in creating direct ads to the right audiences from each of our customers.

We do not buy inventory but offer a platform where the users can manage their inventories in a more organic and easy way

Portada: Is social media (Social Paid) buying a data-driven science or an art? or, is it mixture and why?
PL: We do not buy inventory but offer a platform where the users can manage their inventories in a more organic and easy way, which in turn, optimizes their budgets and reaches the right audience. Now, Paid Social is based on data; without the data social networks offer and our Open signals software, our algorithm would not work properly and manage to get the best information in order to achieve the best results for our clients’ campaigns.

Portada: Being a veteran in the Latin American Internet: At what stage do you think the sector is at? Do you think that a bubble like last decade’s may happen again?
PL: “I think in LatAm, we are again in the right position to tap  e-commerce in different countries, with big players in each market (here, we still need to educate final users more so that they are confident in paying with their credit cards or other online payment method.) Advertising is growing  in double digits YOY, but mobile advertising is what I see growing the most,  from APP to APP retargeting to advertising targeted to users in social networks. I do not think we will have another bubble as that of  early 2000s. However, the time to invest in advertising campaigns and better technologies for e-commerce is now. The boom should happen in 2016.”