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Facebook is looking to Instagram for the future of digital ads

One analyst estimates that ads on Instagram will account for 70 percent of Facebook's new revenue by 2020. Justin Sullivan/Getty Images

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Many users think of Instagram as the younger, cooler Facebook. And advertisers think so, too. In the first installment of my interview with Mark Rabkin, vice president of ads and business platform at Facebook, we talked about how Facebook has changed some rules around ads as part of an effort to clean up its “data supply chain,” and whether that has advertisers leaving the platform. Many ad dollars are migrating from Facebook, but not away from the company altogether. They’re shifting to Instagram (which is owned, of course, by Facebook). 

One analyst estimates that ads on Instagram will account for 70 percent of Facebook’s new revenue by 2020, and Rabkin says the most exciting thing for the company is Stories. Those are the super-popular posts that expire after 24 hours (and yeah, Instagram may have stolen the idea from Snapchat). There are even Stories on Facebook now. Rabkin told me people are posting over a billion stories a day, and advertisers need to embrace the format, quick.

Rabkin: It’s an amazing opportunity for businesses to use a similar, kind of authentic, more real voice and plug into people’s lives in a great way. But the other thing we’re talking about is this is kind of like a warning shot for how fast shifts happen in the mobile world. And a lot of what we’re working on with businesses is telling them, “Hey, you gotta get on this train.” But this is not the only one. Trains are going to be leaving the station every year.

Facebook has been hosting boot camps for advertisers to teach them how to make these new kinds of ads. So expect to see a lot more ads in your Stories. But what about users and how they might not be so excited to see more ads in their feeds?

Rabkin: I think people will be OK. We have, over the years, so much experience figuring out how to add ads to a product in a way that people respect and enjoy. We do absolutely extensive research on how people feel about the ads. So I think we will be able to get people to a good place, manage their expectations, provide them a good experience, just like we’ve done in all the other products we’ve been able to monetize with ads.

One topic I wanted to know more about concerning ads on Instagram: all the small companies selling directly to people on the platform. Their Instagram ads may look great, but not all of them are exactly above-board operations. I asked Rabkin if he worries that ads for fake or low-quality products will turn people off of buying things advertised on Instagram … like that time I and all my friends bought the same great-looking yoga pants that turned out to be cheap and awful and didn’t fit anybody.

Rabkin: What we’re starting to make a lot of progress on is measuring how happy people are after the experience. After they buy something like yoga pants, how do they browse ads in the future? Are they still into them? Is it different? And we’re trying to manage it so that every experience you have with ads on Facebook or Instagram makes you more confident and happier and more likely to engage with businesses on the platform in the future. And if we find that the opposite is happening, then we’re managing those companies.

Rabkin also said Facebook is experimenting with new forms like augmented reality ads. Those might let you virtually try on makeup or see how a couch would look in your living room using your phone’s camera right in the Instagram app. One thing is for sure: Instagram is where the money is, and you can expect more commerce in your feed in 2019.

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