Publishers Aren’t Seeing Revenue From Instagram’s New Ads
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Most media executives are patient as they see big potential in the social media platform’s Stories product
For publishers Instagram Stories are, for now, the anti-Discover.
Unlike Snapchat’s ultra -exclusive Discover platform, which is limited to a few dozen partners who commit to creating unique content on a daily basis, any media company can set up an Instagram Stories account.
And while Snapchat’s partners get a piece of the ad revenue generated on their Discover channels, publishers as of now are not getting any revenue cut from Instagram Stories, which just rolled out its first advertising on Wednesday.
Most publishers told CMO Today they are patient, as they expect Instagram to eventually share ad revenue or create some other form of ad revenue for Stories.
A spokeswoman for Instagram, which is owned by Facebook Inc., said the company has no comment on how the Stories business model may evolve.
In the meantime, publishers see a growing opportunity to weave marketers’ messages into their Story content. Currently, publishers are permitted to charge marketers for this “sponsored content” and keep all the revenue.
The new Instagram Stories ads sold by Instagram are very Snapchat like: the placements are full screen vertical videos that can run for 15-seconds, or static photos that run for five seconds. The charter list of advertisers includes L’Oreal, Bacardi, McDonald’s and Wendy’s, Instagram said.
To be sure, Instagram only launched the Stories product last summer, and only so many publishers have committed to regularly creating content for the service. That content ranges from an occasional behind-the-scenes image from a photoshoot to snippets of interviews with celebrities, like the ones recently posted by by Entertainment Weekly on Alec Baldwin and the cast of ABC’s “Blackish.”
Instagram said Wednesday that Stories now reaches an astonishing 150 million people a day (the same number that use Snapchat on a daily basis).
James Quarles, vice president of Instagram Business, said that one third of the most-viewed Stories to date come from businesses, including media companies.
“Publishers are great Stories creators,” he said. “They have so many great content assets.”
Brian Sugar, co-founder and chief executive of women-centric content companyPopSugar Inc., raved about the viewership the company is seeing via Instagram Stories, and said he was confident a viable business will emerge.
“Somehow publishers must see value in producing content for these platforms,” he said.
Indeed, producing content for any social platform consistently takes time and resources. Bryan Goldberg, chief executive at the women-aimed digital outlet Bustle, noted that producing such content is “not simple” and is different from shooting photos that can be used in Instagram’s traditional feed.
“It’s still really early days on Instagram,” he said. “It really helps publishers build their brand. It’s not yet at the center of our revenue strategy.”
Mr. Goldberg said that Bustle’s audience on Instagram has surged from 200,000 to close to 1.4 million over the past year. That should make the publisher’s Instagram Stories appealing to brands looking to do sponsored content.
“The fact that they opened the door with ads should lead to more things down the road,” Mr. Goldberg added.
One publishing executive said he was surprised that Instagram didn’t launch a revenue share program for Stories as part of the ad rollout, simply to put pressure on Snapchat. Another top media executive said she thought it would be a matter of time.
Philippe von Borries, co-founder and co-chief executive of Refinery29 said that, historically, Instagram has followed Facebook’s lead when it comes to ad products. Given that Facebook has started testing mid-roll ads in videos, that could signal a similar move by Instagram down the road.
In the meantime, Mr. von Borries is also bullish on the creative potential for doing Stories on behalf of paying marketers.
“Instagram Stories are a lot more organic, and the content tends to be very loose and experimental,” he said. I don’t think anyone is up in arms [about monetization].”
Write to Mike Shields at mike.shields@wsj.com
