3Q EARNINGS CALL: How Facebook Can Learn From Instagram’s Early Advertising Test

By David Cohen 

InstagramAdLevisThe recent preview of how ads will look on Instagram drew some attention during Facebook’s third-quarter earnings call Wednesday, as BTIG Analyst Richard Greenfield, who has been critical of the social network’s advertising efforts in the past, asked whether Instagram’s mission of ensuring that its ads are “creative and engaging” would carry over to its parent company.

Greenfield asked during the earnings call:

Hi. I really wanted to ask you about the Instagram blog post that you put up the other week, where you stated specifically that, I think the quote from the blog was, you want ads to be creative and engaging, and that seems pretty different than most of the advertising that I have seen on Facebook, whether on mobile or on the desktop. I wanted to ask you how do you think, or is it possible that if this strategy of advertising works well on Instagram, could we actually see a new form of advertising appear on Facebook sometime in 2014 or 2015?

Chief Operating Officer Sheryl Sandberg responded to the question:

So what we announced last week is a small test with 10 advertisers to start showing ads in the Instagram feed. And we are excited about it because there is a lot of interest and there are a lot of excited brands. When you think about ads being exciting and engaging, I think we think about two things. We think about ads that fit the format of the product that they are part of.

So the Instagram ads right now are the pictures and videos, which are exactly what people post on Instagram. If you look at the progress we have made with our News Feed ads, those ads, those in the size, the shape. You know they got larger when they moved over from the right-hand side, right-hand column, but they are also meant to be as exciting, as engaging, as the content.

So our goal is, we want our ads to be as good as the user-shared content. Some of them are, a lot of them aren’t. We have a lot of room to grow in improving that quality. But in terms of the excitement you will see or the interest, that is our goal. And we are just going to match the format of the products we are working with as we roll out ads.

Readers: Can Facebook borrow some inspiration from the early tests of advertising on Instagram?