Instagram has revealed plans to sell advertisements in IGTV, its home for longer videos, a bid to compete with YouTube for a larger share of the booming market for online video.
Bloomberg reports that Instagram started reaching out to its top video creators on Friday, asking them to partner on ad tests.
Starting in the Spring, those in the program will receive a 55% share of all advertising in IGTV, the same rate as YouTube, according to people familiar with the matter.
The latest move aims to drive Facebook’s advertisement revenues, which remain company’s key growth driver.
Notably, advertisement accounted for 98.5% of the company’s total revenues in 2019. Further, strengthening advertisement endeavors are aiding the stock in gaining investors’ confidence.
Consequently, the latest move is likely to aid the company in gaining further traction among investors in the near term.
Coming to the price performance, Facebook has returned 6.1% over a year, against the industry’s decline of 15.9%.
Additionally, the move will help the company in expanding footprint further in the online video market where competition is intensifying with the growing online video advertisement efforts of other players.
Mary Keane-Dawson, Group CEO of leading influencer marketing agency Takumi, said: ““In June 2018, former Instagram CEO Kevin Systrom said that IGTV would become financially sustainable ‘in time’. Now it seems that time has come, as the platform is finally allowing creators the opportunity to earn money via the longer-form content hub.
“Consumer demand for video content on social media is huge. In just four years we’ve seen video platform TikTok become the most downloaded app on Apple’s app store with 500 million active users. This consumer demand, coupled with IGTV’s huge potential user database, creates the perfect opportunity for brands to increase user traffic and boost the visibility of products and services.
“IGTV’s monetisation plans also open up a world of opportunity for creators and influencers, who have will receive a 55% share of the revenue generated via ads – the same rate as YouTube.
“IGTV got off to a slower than expected start when it launched, but the introduction of ads may unlock the channel’s true potential. IGTV’s video advertising offering will have to significantly differentiate itself from other channels to ensure it stands out in a crowded market though and wins over creators and consumers. Brands need to think strategically about how they can best harness influencer opportunities on IGTV to reach Instagram’s highly engaged consumers and generate additional revenue.”
