On Wednesday, photo sharing app Instagram announced 500k active advertisers on the platform; more than double the numbers reported in February. Is Instagram leading the pack? Or are they following trends? What’s going on with digital advertising?
Instagram Announces 500K Advertisers; What’s Next?
Advertising isn’t a new concept. Marketers have been influencing buying decisions for centuries. In fact, the first published ad showed up just on the heels of the first published newspaper, The Boston News-Letter, in 1704, and sought a buyer for a Long Island Estate on Oyster Bay.
Since then, advertising has gone from newspapers to direct mail to phone books, billboards, mascots, and sponsorships… “Traditional advertising”. But as technology improves, so does the ability to reach audiences. Advertisers, brands, celebrities, and friends are all competing for our attention. And the platforms with the largest user bases will draw in the most advertisers.
After launching its ad program in September of 2015, Instagram reported 200k advertisers in February, just five months later. What’s even more impressive is that IG has not only maintained that number, but more than doubled it! The Facebook owned photo app reported Wednesday that 500k advertisers are active monthly. They didn’t just run an ad once and forget to come back.
But the truth is Instagram is just following the rest of the internet. Online advertising is everywhere we go. So what can we expect next from IG and the rest of the web? Let’s take a look.
1) Mobile: Internet ad revenue hit $60 billion in 2015, more than a 20 percent increase over 2014. Mobile ad revenue grew by more than 66 percent, while desktop was up just 5 percent.
Phones are getting bigger. Well, at least their screens. And while mobile ad spend is rising, marketers are also building campaigns around those mobile devices. Layouts are made with a 6” screen in mind. Even websites are building around mobile. Facebook recently launched mobile lead ads, where users simply tap an ad, tap again to confirm their user info (already populated), and they receive their instant download or discount.
Filling that information out on a mobile device took 38% longer than on desktop, leading to a drop in conversions for advertisers on mobile devices. Now, mobile is converting higher than desktop ads. And that won’t change anytime soon.
2) Video: Ads themselves are evolving. Video ads, especially short video ads, are converting. Between Q3 2012 and Q3 2014, smartphone and tablet video consumption grew 400 percent and now accounts for more than 30 percent of all online videos played, according to Ooyala’s Global Video Index.
Companies are utilizing smart, funny, creative videos to attract attention and build their brand. Whether on YouTube, Snapchat, Vine, Facebook or Instagram, video advertising will only continue to grow.
3) Native Advertising: Users don’t like to be “sold to”. When an ad is blatantly advertising, it can be a turnoff.
“SuperMegaAwesome Sprinkles are now 40% More SuperMegaAwesome-y!”
You get the picture.
Think of Native advertising as a “sponsored post”. A brand promotes a story, status, tweet, blog post, or video they created for the social property the user is visiting. For example, sharing a 140 character tweet won’t do you much good on Instagram, but promoting it on Twitter.can be useful. Facebook has really mastered the art of the sponsored post, using tight advertising regulations to make users feel more connected to ads they’re seeing. Which is why these ads get users to take action so much more frequently.
While the future of digital advertising is a conversation that can go on for days, these three trends are more than just trends. They’re foundations for advertisers to build on. The average person spends about 6 hours a day online, of which about 2 of those hours are spent on social networks. Advertisers will find us where we spend the most time. And they’ll be very sneaky in how they do it. Having brought in $5.6 billion in Q1 of 2016 alone, Facebook is still king in the social media space. Look for FB to lead the way there.
Do you think shareholders like the changes? It sure seems so.
Facebook (FB) shares are up since Instagram’s announcement.
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Trump Says Economy ‘Roaring Back’ in June As 4.8 Million Jobs Added
The economy added back 4.8 million jobs last month, according to the government’s June jobs report released yesterday. That handily beat the 3.7 million jobs forecasted by economists and dropped the unemployment rate down to 11.1%.
After the report was released, President Trump said the economy was “extremely strong” and “roaring back” after the country has regained more than 7.5 million jobs in the last two months. Trump added that the economy will keep growing unless voters elected Democrat Joe Biden in November. He said Biden would raise taxes and hurt the economy and the stock market would “drop down to nothing.”
Of the jobs added back in June, bars and restaurants hired – or rehired – 1.48 million workers. This comes as many reopened for outdoor dining in the early phases of the reopening. They brought back a similar number of workers in May. It happened after shedding more than 6 million jobs due to the pandemic.
The retail sector regained 740,000 jobs, healthcare added back 358,000 workers, and manufacturing saw 356,000 jobs added.
The energy sector continues to be battered by low oil prices amidst the economic slowdown. Additionally, that industry shed an additional 10,000 jobs last month.
The return of lower-paying jobs like those found in the restaurant and hospitality industry dragged down the average hourly wages for the second straight month.
Many are cautioning against reading too much into reports like average hourly wages while the economy is in such turmoil.
Stephen Stanley, chief economist of Amherst Pierpont Securities, says, “The wage figures will be pretty much useless for a long while until the labor market gets back to some semblance of normality.”
Andrew Chamberlain, chief economist of the job site Glassdoor, also gave an explanation. He added, “Today’s positive jobs report does provide a powerful signal of how swiftly U.S. job growth can bounce back and how rapidly businesses can reopen once the nation finally brings the coronavirus under control — a reason for optimism in coming months.”
Unfortunately for many of the workers recently rehired to work in bars and restaurants, the recent spike in new coronavirus cases could lead to those jobs quickly being lost for a second time. Bars in many states are being shut down again in an effort to curb the growing number of cases.
The unemployment rate fell for the second straight month. However, the Bureau of Labor Statistics is trying to fix a reporting error that, if corrected, would increase the unemployment rate by 1%.
The problem is how households respond to the monthly survey that is used to calculate the unemployment rate. The jobless rate would have been 1 point higher if not for continued problems in how respondents answer the question about their employment status.
What many consider the “real” unemployment rate, which is the U6 rate, includes workers who can only find part-time jobs. It also includes those who’ve become too discouraged to look for jobs because so few are available. Using that measurement, the unemployment rate stands at 18% in June, down from 21.2% in May.
Trump Favors Larger Stimulus Checks, Says ‘Tremendous’ Market Crash if Biden Wins
In a wide-ranging interview with Fox Business News, President Trump mentioned his support for another round of stimulus checks and says should Joe Biden win the election in November, we should expect the stock market to crash “a tremendous amount.”
On Stimulus Checks
Speaking with Blake Burman, the president says he is in favor of another round of stimulus checks, but wants to make sure that there is a financial incentive for Americans to return to work.
“I support it, but it has to be done properly. I support actually larger numbers than the Democrats, but it’s got to be done properly. We had something where it gave you a disincentive to work last time. And it was still money going to people, and helping people, so I was all for that. But we want to create a very great incentive to work.”
Trump also mentioned he wants the checks to arrive quickly and spent quickly, without the Democrats adding complications.
“I want the money getting to people to be larger so they can spend it, I want the money to get there quickly and in a non-complicated fashion. And they wanted to make it too complicated, also it was an incentive not to go to work,” said Trump.
Returning to work is what hard-working Americans are looking forward to, says Trump, and he wants there to be a financial incentive to do so.
“You’d make more money if you don’t go to work. That’s not what the country is all about. And people didn’t want that. They wanted to go to work but it didn’t make sense because they make more money if they didn’t… we want people to get out and we want to create a tremendous incentive for people to want to go back to work.”
On Biden and Taxes
When asked about Joe Biden’s recently announced plans to raise corporate taxes if he becomes President, Trump said “You’re going to crash the market. 401(k)s will be down the tubes, the wealth of the country will be down.”
He added “That will kill the market. It will kill everything we are doing, it will kill jobs, and it will be very bad. Frankly, the stock market is doing well, but it’s an overhang. If he got elected, and they say this, that’s an overhang over the market, because the market would crash. Would absolutely crash.”
When asked what he means by crash, Trump responded, “Markets would go down by tremendous amounts. He’d raise taxes, he’d raise regulations. Look, one of the biggest things I’ve done is I’ve cut regulations more than any President in history. We still have regulations, but they’re much less. His people, the people around him (Biden) are radical left. They’re going to raise taxes, they’re going to raise regulations, and they’re going to put everyone out of business. It would be a disaster.”
Fed to Keep Rates At Zero, Worried About Market Crash Later This Year
The Federal Reserve will keep rates at near zero percent for the foreseeable future. Also, a few members feel worried about a second wave of the coronavirus crashing the markets later this year. These are according to the minutes of the June 9-10 meeting.
Federal Open Market Committee members voted to keep the benchmark short-term borrowing rate in a range of 0%-0.25%. They also said that, until the economy “had weathered recent events,” they would keep it there. Without providing specifics, the notes also mention that “a number” of members believe there is a high probability of additional “waves of outbreaks” of the coronavirus.
This worry over additional outbreak waves and the economic damage it could bring led the FOMC committee to downgrade their economic outlook from the April meeting. The said meeting had predicted a more benign baseline forecast.
The members also indicated that they will begin providing the markets with stronger guidance about future interest rate moves. However, Fed watchers don’t expect the committee to begin providing this guidance any earlier than the September meeting.
“In particular, most participants commented that the Committee should communicate a more explicit form of forward guidance for the path of the federal funds rate and provide more clarity regarding purchases of Treasury securities and agency [mortgage-backed securities] as more information about the trajectory of the economy becomes available,” the minutes said.
Milestones and Metrics
The committee also discussed what milestones they will use to determine an appropriate time to start raising interest rates. When they did, the metrics proposed has split the committee.
In 2012 for example, the Fed said it would keep rates at zero until the unemployment rate fell below 6.5%. Alternatively, they also said it would keep zero rates until the inflation goes above 2.5%.
In June’s meeting, a “number” of members said any interest rate increases should be tied to the Fed’s 2% inflation target. Meanwhile, a “couple” favored using the unemployment rate. A “few” members suggested the committee set a specific date.
The FOMC also released its expectations for GDP over the next few years. The median GDP projection for 2020 was a contraction of 6.5%. A 5% increase in 2021 and a 3.5% in 2022 will follow this. However, they acknowledged “that there remained an extraordinary amount of uncertainty and considerable risks to the economic outlook.”
Trump on Powell
Meanwhile, there’s a bit of good news for Federal Reserve chairman Jay Powell. It appears he has slowly won over his most vocal critic, President Trump.
During an interview on Fox Business News, Trump said Powell has “stepped up to the plate” and he’s happy with Powell and Treasury Secretary Steve Mnuchin for the work they’ve done to help the economy recover.
“I would say that I was not happy with him at the beginning, and I’m getting more and more happy with him, I think he’s stepped up to the plate. He’s done a good job, he’s had to liquify a little bit, let us liquify, put out the money that you needed, and I would say over the last period of 6 months he’s really stepped up to the plate.
“I can tell you I’m very happy with his performance, and Steve Mnuchin, I think they’ve both done a very good job, they’re working together very closely.”
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