The India #insta story

Sunny Sen September 19, 2018

Since the time Kuval’s parents started liking her pictures and posts on Facebook, the 22-year old graphic designer has chosen to stay away as much as possible from the world’s biggest media property. “I don’t want my parents to click on my pictures,” says Kuval, who prefers to go by her first name. Her colleague Pratibha Budhraja, 25, too, has moved away from Facebook because of “too many relatives” on the platform. Rythm Wadhawa, 19, says there is nothing new happening on Facebook. “It’s boring. I haven’t opened Facebook in weeks,” she says.

But, in other ways, all three have gotten closer to Facebook Inc. more than ever before: each of them checks Instagram every hour. (Facebook Inc. owns and runs Facebook and Instagram, besides WhatsApp, Messenger, and a couple of other platforms.)

Yes, like in the US and other advanced internet markets, “#Insta” is barrelling ahead in scale and momentum in India giving a big boost to Facebook Inc.’s ambitions in this country. According to Reuters, Facebook is expected to touch some $980 million in India revenues in 2018. Rival for digital advertising in India, search giant Google crossed the $1 billion revenues milestone only last year.

The two account for nearly 70% of India’s digital ad market today, already third behind only TV and print ads. The well-followed FICCI Frames reports series predicts digital ads in India to grow to some Rs 14,550 crore this year from Rs 11,490 crore in calendar 2017 – a growth of 26.2%. The digital ad revenues predicted for 2020 is Rs 20,360 crore. Print ad revenues for that year is forecast at Rs 26,240 crore underscoring the likelihood of digital ad revenues overtaking print sooner than later.

Facebook declined interview requests for this story and we have put it together reporting around Instagram and the company in its second-largest market by users.

When he led the $1 billion acquisition of Instagram in 2012, even Mark Zuckerberg, founder and CEO of Facebook, may not have imagined that the buyout would be so successful that it would cannibalise the mothership as soon as two years later.

The desi Insta generation

Young Instagram users that FactorDaily interview, almost unanimously, say Facebook is cluttered, while Instagram is simple. Facebook is for everything and everyone. People use Facebook for sharing news articles (some of it fake), posts, pictures, and long and short videos.

Instagram, on the other hand, is not designed for virality. It isn’t for viral broadcasting. While you can post your pictures and videos, there is no “re-share” button, which curbs amplification. External links, too, don’t work, making Instagram’s use limited and more likeable among youth.

For context, this is what researchers have said: a Pew Research Center survey points out that 51% of American teens ages 13-17 use Facebook less than YouTube, Instagram or Snapchat. In the survey, 72% teens said that use Instagram every day, up from 52% last year. User behaviour in India is directionally the same.

According to online video and analytics firm Vidooly, 4% of India’s population is active on Instagram – a quarter of them women. (Globally, the ratio is equal.) About half of Instagram users in India are in the age group of 18-24, while 15.53% are 13-17 years old, 26.3% are 25-35 years, 5.28% 36-45 years, and 2.89% are over 46 years old.

The shift in teens’ social media behaviour is because of the smartphone – India sold 124 million of them in 2017 – which are becoming more video and picture friendly. While Facebook is still more popular among Indians with over 200 million users, Instagram is expected to soon catch up because about half of India’s population is less than 27 years old: often referred to as the Instagram generation.

Experts believe that Instagram is a little like television and a little like newspapers. “In the good old days you could watch a TV ad and talk about it but on Instagram, you can share it,” says Ambi Parameswaran, former CEO of FCB Ulka Advertising and currently founder of Brand-Building.com. “(In Instagram) you pay to get followers and then you pay to show ads to those followers like you did in newspapers.”

A tenth of Facebook India

This June, Bloomberg Intelligence estimated Instagram to be a $100 billion company if it was outside of Facebook’s shadows. Ads on Instagram are growing faster than Facebook ads. According to the Merkle Ad Report, companies spending on Instagram ads grew four times that of Facebook (177% vs 40%) in the second quarter of 2018. As per the eMarketer data referred by Bloomberg Intelligence, Instagram can be as much as 16% of Facebook’s revenue next year, up from 10.6% last year.

In India, Instagram is growing a smaller revenue base but there is no questioning the momentum. A Facebook insider says that Instagram makes about $70 million in India, a little more than double of what it did a year ago. As far as users are concerned, according to Hamburg-based statistics and market research firm Statista, India is Instagram’s second largest market after the US. India had 67 million users in July, while the US had 120 million. Vidooly estimated about 52 million monthly active users for January 2018.

It is more than green shoots for Instagram in India. “Facebook never marketed Instagram as a marketing tool,” says the CEO of a leading ad agency, who declined to have his or his employer’s name taken in this story. “It’s only in the last one year that companies in India have taken notice of Instagram’s value.”

Instagram is 10% of Facebook India’s revenue. “One reason for Instagram’s low revenue is because it didn’t have a dedicated team,” says one former Facebook executive. “When the company talks to brands and marketers in India, Instagram is just of the many tools that Facebook offers to boost visibility.”

This is despite brands like Colgate, LimeRoad, Bombay Shaving Co, CashKaro, Happy Shappy, among others that popped up in FactorDaily’s reporting showing interest in Instagram where they find more repeat users and better ad recall.

Early traction

About a year ago, when Voonik, the online apparel and fashion seller, started engaging on Instagram, it was just an experiment. The reason was simple: that’s where all the fashion enthusiasts were. Voonik could learn new trends and even promote itself.

Before Instagram, Voonik was very active on Facebook. “Instagram is Facebook on steroids, when it comes to visuals,” says R Arivind Krishnan, head of marketing at Voonik. “It has become a potent place for marketers.” Voonik’s initial experience was not encouraging. It started with spending 5% to 7% of its digital marketing budgets on Instagram and pulled back when the traction wasn’t much. But, experiments that followed clicked and today Voonik is spending up to 10% of its digital ads on Instagram (and 35% on Facebook).

Krishnan explains that there are instances that don’t work on Facebook, like stories and influencer marketing. Facebook, too, has stories as a feature, but the engagement is high on Instagram.

For LivSpace, an online seller of home decor and furniture, Instagram is a strong channel even for performance marketing as more people move towards visual mediums. LivSpace’s largest channel is still Facebook where it boasts of a million likes. On Instagram even with just 80,000 followers, the growth is much faster — 60% since March.

On Instagram, people are younger, says Swati Ailawadi, head of content and communications at LivSpace. Most of LivSpace’s followers are between 25 and 35 years old, while on Facebook they are older: in the 32 to 40 years bracket. On Facebook, there are more men and on Instagram, there are more women.

Ailawadi doesn’t just want customers to come through Instagram. For LivSpace it’s a way to attract designers, too. Instagram offers a Pinterest-like ‘save the image’ feature, which is widely used among LivSpace followers. Through its Instagram stories, the viewer is led to the Instagram blog, which talks of designs and products, and only then it gets converted into sales.

Already, Instagram has become the second-largest channel for traffic after Facebook. “Facebook is the largest, Instagram is a close second. Pinterest comes third,” Ailawadi says. Some 40% of organic traffic comes from Facebook, 32% from Instagram, and 20% from Google.

Instagram: an afterthought

For most others, still, Instagram is work in progress.

The target audience for Sana Hoda Sood, co-founder of HappyShappy, a fashion and wedding product discovery platform with Pinterest-like features, is millennial girls in India, most of who are on Instagram. But, she points out some crucial problems with Instagram. “To run an ad on Insta, you have to go through Facebook,” Sood says. One has to set the target audience on Facebook to run a campaign on Instagram. “Insta is an afterthought.”

It doesn’t help that Instagram ads are more expensive than those on Facebook ads: Rs 3 vs Re 1, at times.

These are among reasons that many large consumer companies in India haven’t explored Instagram deeply. “Most of our marketing happens on Facebook,” according to the India marketing head at a European food major, asking to stay anonymous. “Instagram is 2% to 3% of our overall digital marketing budget, Facebook is nearly 35%. But, that’s also because Instagram is very new to us.”

For an MNC consumer appliances maker, the situation is much the same. “Sometimes we run some campaigns, but the spend is negligible,” says its head of digital marketing, who is not allowed to disclose specifics. This person also requested anonymity. His employer’s overall marketing budget is around Rs 500 crore, about 25% to 30% of which is for digital. Instagram is a small fraction of that.

Things at Facebook are reacting to market feedback. Lately, it allows marketers to set target audiences and run ads exclusively on Instagram, without having to bundle them with ads on Facebook.

At CashKaro, a deals and discounting website that counts Amazon and Flipkart as its clients, social media marketing manager Sanjula Agrawal is witness to a big shift from Facebook to Instagram. “The cool quotient is with Instagram,” she says. Facebook, though has ‘live’ features, but Instagram is where people are using it. Add to that, the swipe-up feature makes it easy to take the user to a transaction or a lead generation page. That makes it easier and more cost efficient to get consumers in CashKaro’s fold. “The cost of customer acquisition on Instagram is Rs 40,” says Agrawal, adding it is much higher on Facebook.

One way to acquire customers is to target them using influencers and Instagram enables that. Instagram can sell aspirations, especially when you see a celebrity using a particular product. “Influencer marketing works on Instagram but not much on Facebook,” says Krishnan, who has lined up influencers to promote Voonik in the months to come.

Engaging with influencers

Largely, Instagram is used by urban youth, says the former Facebook executive quoted earlier. He added that user growth in the past one year has slowed down on the platform as large sections of Indians still don’t associate themselves with an Instagram or a Snapchat-like platform. That reflects in how user numbers on Instagram are far lower than on Facebook and WhatsApp.

“Appealing only to urban audiences doesn’t help,” says this person. “You have to be relevant to a larger set of audience, at least to the semi-urban users, who are coming to the internet in hordes.” He is referring to the explosive growth in India’s internet users, driven by adoption to data in smaller towns and villages, largely driven by the launch of an all-4G, pan-India phone network by Reliance Jio. (Facebook, too, wants to appeal to a larger set of audience, as a part of getting a chunk of the next billion users.)

Marketers have found out new ways to connect with consumers on Instagram. One is by doing influencer engagement. Nykaa, an online fashion and cosmetic retailer, has tied up with a bunch of fashion bloggers to endorse the products. That brings an instant connect.

Bloggers, models, celebrities, travellers, fitness enthusiasts, chefs, and food experts have seen a surge in followers in the past couple of years. With Instagram’s latest feature to promote longer videos through Instagram TV, the company is looking at opening up its revenue generation.

Facebook allows you to advertise on Instagram via the FB ad dashboard
Facebook allows you to advertise on Instagram via the FB ad dashboard

“Monetisation of core Facebook and Instagram assets still has material upside potential and Messenger and WhatsApp remain unmonetised,” said Mark S.F. Mahaney, analyst with RBC Capital Markets. “Carousel Ads, Canvas Ads, Dynamic Ads, and Instagram monetization will be key parts of this trend over the next two years. The release of Instagram TV this quarter is the best example of Facebook’s progress in developing a viral video platform with great monetisation potential.”

Instagram TV, or IGTV, is a standalone app for long format vertical videos, which is expected to compete with YouTube. It was also available as a feature in Instagram’s main app. Initially, IGTV will not have ads, according to Instagram CEO Kevin Systrom, but later it might.

LivSpace is putting up its first long format vertical video next week. “It will be a home tour… we designed an 8 BHK in Delhi, and will see how people react to that,” says Ailawadi.

Back to influencer marketing: for CashKaro, too, it works. When an influencer runs a campaign a portion of the commission goes to the influencer. In April, for example, CashKaro partnered with 500 influencers. It was the company fifth birthday. “That was when we realised the power of Instagram,” says Agrawal.

CashKaro ran the campaigns on Facebook and Twitter as well, but the impact was best seen on Instagram. There was a 20% spike in traffic because of Instagram. Sessions generated in higher in Instagram. The click-out ratio on Instagram is at an average 25%. Engagement average per post is 45%.

The better platform?

The elephant in the room when it comes to anything new in Indian advertising is that it is yet a nascent market marked by anaemic ad spending in India. Ad spends in India per capita is about one-hundredth of that in the US, the world’s largest and most advanced advertising market.

That said, some things work better on Instagram, clearly. Performance advertising on Facebook (and Google), brand advertising on Instagram (and YouTube). Credit card deals work best on Facebook because there is a lot of text. Something like fashion, where CashKaro and Nykaa are focussed on, Instagram comes tops. There are exceptions, for sure: realtor Ambience Tiverton is promoting the sale of its flats on Instagram and generating leads for its Noida, Sector 50 property.

Agrawal says that the Instagram channel is very young. “The design of the content should suit the youth. It needs to be quirky… That’s the new flavour of social media,” she adds. For example, hashtags are catching up – driving about 10% of traffic to any brand. Yet, the extra learning and work are worth it. “The lifetime value of an Instagram is higher than other social media platform,” she says.

The other problem is that brands want to be everywhere. “Connecting business objectives with social media is a challenge,” says Vidya Varadarajan, director of digital marketing at Jacob Creative, a creative agency. “A lot of companies are a little wary of jumping on to Instagram.”

“Facebook is popular when it comes to sharing social messages,” she says. “For photographers, decor artists, fashion designers, Instagram is the place to be.” On Instagram, everything visual can become a trend – be it grain effects, bad quality photos, a still picture from younger days, a DGAF selfie, upside down selfies, zoom culture, or even nudity.

Instagram has its challenges of a young platform. Facebook has been popular for long, reflecting in a better API integration for brands. WhatsApp is easy to use and there is no learning curve resulting in its wide use. Instagram, in comparison, has a learning curve. “B2C companies and visual product companies are still looking at ways to monetise their presence on Instagram,” says Varadarajan.

Brands have to learn to make their content Instagram worthy, too. For television, over years, quality and engagement through ads did well. “On Instagram, they haven’t been able to do that,” says Parameswaran, the ad veteran.

But, one thing is for sure. Millennials are increasingly deciding where the money goes in India, the world’s third-largest market by purchasing power. And, millennials are increasingly making those decisions based on social media. It is fair then to conclude that their platform of choice – read: Instagram – will come up trumps sooner than later.


Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures, Vijay Shekhar Sharma, Jay Vijayan and Girish Mathrubootham among its investors. Accel Partners and Blume Ventures are venture capital firms with investments in several companies. Vijay Shekhar Sharma is the founder of Paytm. Jay Vijayan and Girish Mathrubootham are entrepreneurs and angel investors. None of FactorDaily’s investors has any influence on its reporting about India’s technology and startup ecosystem.