Industry participants are excited about Instagram’s new ad formats as these capabilities make ads more targetable. It's predicted that these changes will make the photo-and-social-sharing platform more appealing to advertisers than Twitter and Snapchat.

Instagram's mobile ad revenue is estimated to outpace Twitter and Google by 2017. After switching to ad API in June of this year, the photo-and-social-sharing platform is currently taking the next step to scoop more ad dollars by integrating Facebook targeting capabilities and making its ad products available to brands of all sizes.

gilt-instagramCurrently, Instagram offers two ad units: website clicks and mobile app installs. According to the platform, online shopping site Gilt drove an 85 percent lift in app installs.

Marketing executives cannot wait to experiment with Instagram's new capabilites that are rolling out this week, particularly its delivery and optimization tools. These are designed to manage and drive the performance of campaigns across Facebook and Instagram.

"Brands have been pining for the change to create content for Instagram that is targetable, and that day is finally here," says Daniel Bennett, chief digital officer of global agency McCann Erickson in New York. "This is a natural and expected progression for the content-sharing network since being purchased by Facebook in 2012. The simplicity and affordability of the ad network on Facebook, has given brands the ability to create, target, and publish content at will and reach their consumers with extreme accuracy."

One of the best things about social advertising is the ability to optimize in real-time. Instagram's new delivery and optimization tools will help advertisers decipher what is and isn't working on the platform, according to Nick Hoppe, director of media strategy at the social media agency The Movement Strategy.

"Instagram is arguably the hottest social platform out there right now because it's incredibly easy to (Read more...) and so visually rich. Combining that with Facebook's powerful targeted advertising capabilities is the perfect match for so many brands out there," Hoppe explains, adding that these new tools can also help prevent users from seeing irrelevant content, while also optimizing advertising on Instagram without cluttering feeds and spoiling the experience.

Aside from the eagerly awaited delivery and optimization tools, Instagram is going to add a product called Marquee to its ad arsenal. Jim Squires, director of market operations at Instagram, tells ClickZ that Marquee is a premium ad product for big moments. It helps advertisers drive mass awareness and get the most reach possible on a given day. Different from Instagram's self-serve ad products that are usually used to target a small segment in the long run such as Carousel Ads and Sponsored Stories, Marquee would be the best option for a brand aiming to reach broader segments in a short time-frame.

For example, if an automaker releases a new model and intends to reach the U.S. market for brand awareness, the company can leverage Marquee to target U.S. consumers on the day when the new car is debuted.

In addition, Instagram is going to extend its 15-second video ads to up to 30 seconds in length, allowing brands to tell more rich stories. The platform will also give ads a more cinematic feel through landscape photo and video.

With a variety of ad formats available to businesses of all sizes, many in the industry are concerned that Instagram will be filled with rubbish adverting. However, Squires is confident that the platform will continue to be careful about who gets to advertise in the app and who does not.

"The idea is that early on, we review every single ad we serve, because the advertising content on Instagram has been fantastic. As we scale up, we are going to use a combination of human review and automated review," he explains.

"Facebook has developed sophisticated quality mechanisms to deliver the right ad to the right person at the right time, so we will be able to use its systems," he adds.

Instagram's new ad capabilities are likely to give other social networks a run for their ad revenue. Victor Pineiro, vice president of social media at agency Big Spaceship, says that although his agency is not experimenting with Instagram ads at the moment, he is looking to test them in the near future.

"When you look at the way marketers use Instagram, engagement on the platform is higher and branding is better than both Twitter and Facebook. Snapchat gives you the ability to run small video ads, but Instagram offers more capabilities to run your campaign. I'm guessing that in the next couple of years, Instagram will become a bigger ad platform for marketers than Twitter," Pineiro notes.

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