Facebook Opens Up Its Ad Targeting Tools To Instagram Advertisers

It’s been about three years since Facebook acquired Instagram for approximately $1 billion in cash and stock, and it seems that the company is now set to ramp up its advertising business in a big way.

Over the next few months, the entirety of Facebook’s ad targeting tools will be opened up to Instagram advertisers, explained Facebook’s VP of global marketing, Carolyn Everson, at the Cannes Lions International Festival of Creativity. In other words, for car dealership advertisers, buying Instagram ads that are tailored for specific users will become much easier. For users, ads on Instagram will be better targeted to their interests.

“It’s not like you can just check a box if you’re buying things on Facebook and it will also work on Instagram,” explained Everson, according to Bloomberg. “But we’re working toward that.”

Currently, car dealerships who advertise on Instagram are only able to target users based on their gender, age and country. However, once they can integrate information from people’s Facebook profile details, ads will be much more relevant and should prove to be far more effective. Of course, this may eventually mean that Facebook will be able to increase the cost of its ads, but we’ll have to wait to see how it unfolds.

Since Facebook bought Instagram, the company has been seeking ways to boost its revenue from the photo-sharing service, which has more than 300 million users. By integrating Facebook’s data, Everson says that “it should deliver a better return on investment because the marketer is actually reaching someone who is interested.”

This is a big move for the company, and it’s clear that Instagram is preparing to supercharge its advertising business. It just may work. According to RBC Capital analyst Mark Mahaney, Instagram could generate in excess of $2 billion in ad revenue next year. In comparison, some analysts currently expect Twitter to produce $3.3 billion in revenue next year. Although those numbers are still far apart, there is the potential that Instagram’s increasingly powerful ad offerings will eventually allow the company to surpass Twitter’s share of digital ad spend. Of course, there’s no way to know for certain when that will happen, if ever, but Instagram seems poised to prove that it’s worth much more than the approximately $1 billion that Facebook paid for it.

Instagram announced last December that it had surpassed 300 million monthly active users. The platform is definitely growing rapidly, and considering the fact that it added 100 million new users in less than nine months last year, it will most likely surpass 400 million in the near future.

Conversely, growth has been slow at Twitter. The company did surpass 300 million users last quarter, but it took more than two years to go from 200 million to 300 million. This is significantly longer than Instagram or Facebook, which reached that user base in less than six months back in 2009. The continued growth of Instagram is a significant threat to Twitter’s ability to attract brand advertising.

Now, with Instagram’s ability to tap Facebook’s superior targeting capabilities for its advertisements, it will most likely lead to higher conversions and higher ad prices than Twitter, but there’s no way to know for sure at this point. We’ll be watching to see how Instagram’s increased abilities will be utilized by advertisers in the coming period.