Instagram focuses on scaling ads on Reels in India

Instagram Reels is two years old now. The short video platform that was launched globally in July 2020, is not hurrying into serving in-stream ads on Reels and is instead taking cautious steps ahead.

India, with about 230 million users, is the largest market for Instagram globally. The company states that Reels is currently the biggest engagement growth driver for Instagram.

According to the company, Indian users make nearly six million Reels daily (July 2021). “Ads on Instagram Reels have not gone to all audiences at this stage,” informs Arun Srinivas, director – global business group (India), Meta. In-stream ads have not yet been opened to 100% of Reels audiences.

It is worth noting that five-year-old short video platform TikTok, of which Reels is a clone, raked in $4 billion in advertising revenue in 2021.

“We are still trying to learn and scale up. As a responsible platform, we want to deliver value to advertisers,” Srinivas mentions. The platform is working with some advertisers in certain audience cohorts at the moment.

Brands, both traditional CPG and digital-first in nature, have been working with Meta platforms to reach consumers via Reels. Srinivas says brands like Spotify India, L'Oreal Paris and Maybelline have run ads on Reels in the last few months. Spotify collaborated with creators on Reels to promote its Holi playlist, while L'Oreal Paris and Maybelline advertised make-up and personal care products via Reels ads.

“The Spotify playlist became the most downloaded playlist and L'Oreal and Maybelline observed unaided ad recall lift and top of mind awareness lift,” reveals Srinivas. In particular, the brand study revealed that the ads influenced younger audiences (below 25 years), who tend to spend more time on Instagram Reels.

For now, almost all branded posts on Reels are through collaborations with influencers and content creators.

Concerns about Instagram

While Instagram and its various content formats are very popular among users, brands and content creators have to constantly keep up with the changing algorithm to ensure their posts are seen by users.

Recently, health food brand The Whole Truth Foods, declared that it would be taking a break from Instagram. Shashank Mehta, founder and CEO of the direct-to-consumer (D2C) startup, told afaqs! that there are two reasons for this break.

First, the constant shifts in algorithms meant a lot of the brand’s time was being focussed on keeping up with the algorithms. Second, the trend of short-form content doesn’t serve its purpose on the platform, that of tackling complex subjects.

Is this a matter of concern, given that a majority of D2C brands are born on Instagram? Srinivas responds, “With Meta platforms, brands can target people with the affinities and interests apt for a brand. This brings down the cost of advertising.” He says 90% of users on Instagram follow a brand and a good chunk of them also end up buying from the brands they follow.

“We have seen a lot of D2C brands that may not have the resources to go live on mass media, advertise on Instagram for as low a few thousands of rupees and scale up as they grow in size,” Srinivas adds.

He says that one of the lessons for brands, young and old, is they have to keep engaging the audience with new creatives. “If brands follow the principles of what works in digital advertising, with our tools and algorithm, I don’t see why they will not get the best ROI,” he says.

WhatsApp for Business

Other than Instagram Reels, WhatsApp for Business is a tool that is seeing a fair amount of interest from brands. WhatsApp in India has more than 15 million WhatsApp for Business accounts. Uber, MakeMyTrip, ICICI Bank, HDFC, Kotak, BPCL, IOCL, are some of the brands that use Whatsapp for Business.

Srinivas says that WhatsApp gives potential customers the opportunity to start having conversations with brands. "It works at all stages of the funnel," he adds.

Brands that have no online presence, can get started on WhatsApp at little to no cost. With the options to add catalogs and complete payments through the messaging service, Srinivas says, "Whether it's awareness, consideration or even a transaction, all of these are possible with the aid of messaging. More importantly, one thing I think messaging does is, (it) manages the post-purchase life cycle of the customer."