Marketers See the Full-Funnel Potential of Instagram Stories Ads

While retailers are doing plenty of creative things with organic (i.e., free) Instagram Stories already, on the paid side, Stories ads have officially taken off in a material way for the first time since their 2017 release. The Instagram business page about Stories ads states: “ … of the 500 million accounts using Instagram Stories, one-third of the most-viewed stories come from businesses, and one in five stories gets a direct message from its viewers,” and that “ … more than 50 percent of business accounts created stories in the last month.”

The recent Kenshoo Q2 2019 Quarterly Trends Report revealed that Stories ads on Instagram grew from 9 percent of total Instagram advertising spend in Q2 2018 to 18 percent of total Instagram advertising spend in Q2 2019.

Kenshoo Q2 2019 Quarterly Trends Report | Credit: Kenshoo

This was validated by eMarketer, which reported that “Instagram Stories ranked third on a list of social media marketing features and strategies that were used most by social media marketers (at 47 percent) in North America,” and “ … that 64 percent of U.S. senior ad buyers it surveyed advertised or planned to advertise in Instagram Stories in H2 2018, up from 60 percent in H1 2018 and 48 percent in 2017.”

Credit: eMarketer

Indeed, now is a golden moment for marketers to adopt Stories. As with any biddable media format, the best time to get in is early, before auction saturation takes place. After all, the return-on-investment calculation is return/cost. When media costs are low, the advertising doesn’t have to convert very high to maintain a positive ROI. Search marketers learned this lesson around 2005 as search engine marketing started to take off and more advertisers began competing on the same keywords, eventually driving prices up. Financial models that looked amazing before the dramatic spike in cost per clicks didn’t fare as well once market pressure drove up costs.

What's the Role of Instagram Stories Ads in the Customer Journey?

Anecdotally, what I keep hearing from our social brand and advertising agency clients about Instagram Stories ads is that they're a good format for both branding and direct response. They lend themselves well to branded storytelling and discovery. For many prospective customers, Stories represent their first exposure to a new brand.

Increasingly, though, they're also impactful enough to drive high-value referral traffic to brands’ e-commerce sites. Facebook’s own research shows that “about one in two people surveyed who use Stories said Stories have strengthened their relationships with brands, and many indicated that Stories propel them through the purchase process.” Perhaps the same ephemeral, low-commitment characteristics of Stories that make them so easy to post apparently carry through to more casual shopping behavior, epitomizing the carefree impulse buy.

We also know, as both marketers and consumers, that Stories often represent just one touchpoint and source of influence in a longer and more winding path to purchase. Retailers are also starting to see the opportunity to leverage social advertising as a key catalyst to stimulate other channels — e.g., purchase events on Amazon. This cross-channel impact is a bit difficult for marketers to quantify with legacy measurement approaches, and brands have expressed an interest to put their Stories ads investments in context through newer methods like incrementality testing.

Therefore, as an ad format, Stories ads seem to serve multiple purposes at different points in the funnel — branding, direct response, and cross-channel influence. This makes them an incredibly valuable and useful addition to any marketing portfolio to drive shoppers to buy, especially now.

Instagram Stories Ads Growth Trend Intersects With the Evolution of Social Commerce

For retailers, the popularity of Instagram Stories ads comes at a time when social media is moving closer to the bottom of the funnel. Every major social publisher is pushing the envelope in this area, from Instagram shopping features to Snap’s partnership with Amazon.com, and marketers are investing accordingly. They see the potential for social media to play a bigger role in driving purchase events, and are placing their bets on shopping ads, as evidenced by the percentage of retailers using social media for e-commerce nearly doubling between 2017 (17 percent) and 2018 (33 percent).

Instagram Stories offer a new medium that brands can use at any stage of the purchase funnel. As this ad format matures from test budgets to annually funded programs, now is the time for retailers to jump in while ROI is at its highest before this auction-based market saturates.

Margo Kahnrose is senior vice president of marketing at Kenshoo, a global leader in marketing technology.