There's a new shift in the ad industry developing its wings. The clear move from television, radio and print into digital media platforms (such as Facebook Inc. (FB - Get Report) , Alphabet's Google (GOOG - Get Report) (GOOGL - Get Report) and online news outlets) is nothing new. But now, advertisers are interested in getting real performance and return on their ad spend, so online platforms are beginning to provide just that.
Instagram parent Facebook just had its third-quarter earnings conference call a few weeks ago and it is clear that Instagram wants users to have somewhat of an e-commerce experience. Not only is Facebook building an Instagram shopping app, but advertisements on Instagram stories are already becoming more e-commerce focused. The swipe up feature on IG allows users to do just that, swipe upward and shop. This new feature should boost advertisers' return-on-investment (ROI).
Many Wall Street analysts and ad-industry experts agree that Facebook has retained so much of its ad market share precisely because the ROI on the core Facebook platform and Instagram beats many other platforms.
"You can go strait from an ad to shopping" on Instagram, said Mark Douglas, founder, president and CEO of Steelhouse, an advertising software provider and budget manager.
The swipe up feature is also prominent on Snap's (SNAP - Get Report) Snapchat, although it is not scaling well, as it fails to drive engagement and user growth. "Snapchat is very commerce focused," Douglas said. Although the company is struggling, as seen by its 54% year-to-date stock drop, it isn't the platforms changing advertising format that's at fault. "They're expanding their focus to commerce for sure," Douglas added.
Amazon.com Inc. (AMZN - Get Report) , perhaps one of the more impressive story lines in advertising right now, could see its advertising revenue grow by 45% between mid 2018 to 2020, according to eMarketer. Unlike other digital advertisers, such as Facebook, Snap and Google, which examine user data to suggest products to buy, Amazon uses explicit data, rather than implicit data. It knows exactly what a user wants to buy since it's an e-commerce platform. Users go onto the platform with intent.
"Amazon is a totally different category," Douglas said. Since Amazon can place an advertiser directly with users that intend to buy its products, "Amazon is basically taking all the retailers that already were selling on Amazon and now they're charging them for placement in the search results," Douglas added. Sellers are happy to pay Amazon for both the ad space and the actual sale, Douglas emphasized, because the ad placement is incredibly efficient. The chances the seller can actually convert a user into a buyer of its product is very high.