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Instagram to increase ad load as Meta fights revenue decline

Recent Meta announcements show a decline in revenue for the parent company, so Instagram is chosen as the evil step child for more ads.

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Meta announced on Tuesday that they will soon be expanding ad placements on Instagram and Facebook in an effort to counteract dismal revenue from ads in video content.

Instagram will have two new placement locations for ads: on the Explore home page and in a user’s profile feed. Additionally, there are now two new ad formats that users will begin to see: multi-advertiser and AR.

When users click the magnifying glass icon on their app, they are taken to the grid layout of the Explore home page. Explore shows users content related to their interests posted by accounts that they don’t already follow.

Ads already show up in the Explore feed, which users access when they click on an individual post in the home grid. Now, users will see ads in the home grid as well, peppered in with the posts and Reels that Instagram has curated to the user’s previous likes and saves.

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Users will also begin to see ads in profile feeds, which present one user’s posts as a scrollable feed when a post is selected from the grid on a user’s main profile page. While no specific details have been revealed yet, the company stated that these ads will be opportunities for “supplemental income” for a select few U.S.-based creators, though the profit share margin or who is included in that group remains unannounced.

In addition to ads in new places, Instagram is experimenting with what it’s calling “multi-advertiser” ads. These are suggestions for businesses with related products that will pop up in a user’s feed after they interact with an existing ad. Machine learning will be used to generate the suggestions.

Businesses can opt into or out of multi-advertiser ads when creating an ad in Ads Manager. Because the technology is dependent on machine learning to determine relevant ads to display, advertisers are not guaranteed placements when multi-advertiser ads are turned on.

Finally, Meta reminded businesses that its AR ads initiative, which gives businesses the opportunity to create and turn AR effects into ads, is now in open beta.

Meta reports that businesses who used AR ads in combination with non-AR ads experienced a 3x boost in brand lift and 59% lower costs in advertising over those who only used non-AR ads.

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Meta’s favored example of successful AR advertising is MADE.com, an online-only furniture retailer whose AR ads allowed users to see full-sized furnishings in their home. Reportedly, MADE.com’s AR ads resulted in 2.5x conversion rates compared to non-AR ads, and a 40% increase in ad recall by users who experienced the AR ad.

The new advertising options are clear indicators of Meta’s limited return on investment from IG Reels.

Instagram began offering ads between Reels last year, but so far, engagement has not turned into revenue. Mark Zuckerberg acknowledged this to investors as he laid out this new monetization plan, acknowledging that the inability to profit off of Reels is a huge disadvantage, since reportedly Reels account for 20% of user activity on the platform.

The more popular Reels become, Zuckerberg admitted, the less time users are spending in their Feeds, where advertisers (and Meta itself) can get a return on their investments.

Opening the Explore page up for advertisers marks a keen business move on Meta’s part. According to their own insights, 200 million IG users visit the Explore page each day, and 50% of all accounts visit the page at least monthly.

Instagram isn’t the only Meta product that is increasing its advertising potential. Facebook Reels will now have 4-10 second ads after each “loop” of a Reel – so, instead of a Reel starting over immediately after it’s ended, users will have to either sit through or choose to skip an ad in order to watch the Reel from the beginning again.

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It will be interesting to see how post-loop ads fare on Facebook, considering Meta started monetizing IG Reels over a year ago and it seems we are finally seeing the dismal results now. Considering the internet’s explosion when YouTube experimented with “ad pods” containing 10 unskippable ads on long-form content, user response to new and more ubiquitous ads on each platform will certainly be worth consideration.

Jesse has a B.A. in Women's and Gender Studies from St. Mary's College of Maryland and a PhD in Theatre from the University of Texas at Austin. His research on LGBTQ+ theatre has been published in multiple anthologies and on stage in Austin. At home in Dallas, he enjoys cooking, reading, and spending quality time with his partner and their three dogs.

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