Instagram’s new Shop ads: how do they work?
Instagram has opened up its Shop tab to ads for the first time, giving brands a new way to reach purchase-minded consumers worldwide. With s-commerce on the rise, is it time for marketers to shift more of their lower sales funnel budget from Amazon to social channels?
The social network unveiled Shops last year as part of a larger pivot toward e-commerce with a prominent location on the app’s bottom navigation bar. Now, after testing in the U.S. earlier this month, Instagram has launched ads on the Shop tab globally.
How it works
The new ad format will appear as a tile on the Instagram Shop tab home page. Clicking on the ad will take users to the Product Details page where they can learn more about the item, view additional imagery and browse more products from the brand.
Users can visit a shop from a business' Instagram profile or through feed and Stories. They can also save the product to a wishlist or share it with their friends, adding extra layers of consumer touchpoints for performance marketers to measure and utilise.
Ads will be rolling out in all countries where the Instagram Shop tab is available, and crucially, brands will not need to have an Instagram Shop to run ads in the Shop tab.
These ads will launch with an auction-based model and will only appear on mobile, as Shops is currently unavailable on desktop.
The user’s experience with these ads will depend on how they use Instagram and how many people are shopping in the Instagram tab. If the ad is inappropriate, the user can press and hold its tile to see options to hide or report the ad.
What the advertisers think
Instagram tested Shops ads with U.S. advertisers including Away, Donny Davy, Boo Oh, Clare paint, JNJ Gifts, DEUX and Fenty Beauty.
Hannah Gardner, Senior Associate of Acquisition Marketing at Away (one of the companies involved in the trial phase), said: “I’ve found the most success running ads in an environment where the consumer is already in a shopping mindset, which the Shop tab naturally attracts. The more frequently I can get in front of the consumer in that mindset, the better my potential for ROI.”
Can Instagram beat Amazon at its own game?
The move builds on parent company Facebook’s ambition to monetise its social shopping portfolio, as the social behemoth looks to take on Amazon’s hugely successful e-commerce ad formats. It will also place Instagram in direct competition for ad dollars with key rivals in the social commerce space such as Pinterest Shopping Ads and TikTok, which recently partnered Shopify and now features an ‘infomercials’ video option for marketers.
Speaking of Facebook’s wider ambitions, CEO Mark Zuckerberg detailed new e-commerce innovations and experiences for shoppers in an announcement in June:
“The first big announcement for today is [that] we’re bringing Shops to more places…. The next thing that we’re announcing that I think [will] be a pretty big deal is introducing Shops ads that [will] provide a personalised ads experience based on people’s individual shopping preferences. We’re launching the ability for a business to send shoppers to where you’re going to be most likely to make a purchase based on your shopping behaviour.”
Zuckerberg added: “A lot of shopping discovery begins with visual discovery, right, so you see something that you think is awesome. And then, you know, maybe you want to see other products that are like that, or you want to figure out how to get that product.
“And this is the type of problem that AI can really help out with. [So] one of the things we’re going to do is when you’re on Instagram…We’re getting ready to start rolling out experience and testing an experience that we’re calling visual search.”
This marks another phase in Instagram’s evolution as an e-commerce platform. The move follows the implementation of Reels to compete with TikTok and exclusive product Drops into their own Shop category.
The company is currently testing sticker ads, a user-driven affiliate feature that lets people include stickers in their stories advertising a product. Users will receive a cut of any revenue made through people tapping on the sticker and buying a product.