Editor of www.which-50.com Andrew Birmingham casts his eye over Instagram as an advertising model and finds it’s low key approach is starting to pay BIG dividends…

The decision by Instagram to open its API to 40 marketing tech companies has paid off handsomely. This company announced this week it would secure more than 200,000 advertisers.

That’s an even better result than Twitter for instance which had a four year head start on the popular mobile app.

An the appeal of the platform has gone global very quickly, with the company revealing in a blog that “Seventy-five percent of our advertisers are outside of the US, operating in more than 200 countries.”

Instagram is owned by Facebook which purchased the app in April 2012, relatively early in its life for $US1 billion – at the time the price tag took many by surprise. But once again Mark Zuckerberg has proved a shrewd investor.

Importantly, the first metrics bubbling in from the various advertising and analytics platforms suggest Instagram is proving popular with its advertisers.

For instance, in Kenshoo’s Mobile App Advertising Trends Report released today, the study’s authors say that advertisers’ share of both clicks and app installs obtained through Instagram since the introduction of its advertising API in Q3 2015 exceeded the share of total ad spend, and the metrics showed considerable improvement over the last two quarters.

“In fact, app install ads on Instagram delivered more than 20 per cent of all app install ad clicks in Q4. Instagram provides an opportunity for app advertisers to acquire new customers at a lower cost than other social ads, because Instagram ads have been consistently lower in price than other Facebook ad placements, while delivering nearly identical click-through rates.”

It is not universally good news though. According to the Kenshoo study ads on Instagram are somewhat less effective at driving app installs although click-through rate versus other placements is almost identical, they said.

While Instagram’s performance was a highlight of the report, Kenshoo also analysed the wider mobile app install segment and they found that spending on mobile app ads in social media continues on a stead growth path.

“The fourth quarter of 2015 more than doubled the spending of the fourth quarter in 2014, increasing by 155 per cent. Compared to the previous quarter, spending was up 7 per cent. While Q4 of this past year was the peak period over the last five quarters, the increase in spending from Q4 2014 to Q2 2015 demonstrates that this growth likely has more to do with the organic growth of the channel than any seasonal trends.”

The data also reveals that the volume of app installs tracks fairly closely with the spending trend. Indeed there is an almost linear increase from Q4 to Q2 which subsequently began leveling out through the second half of the year. “We can look at the overall efficacy of mobile app ad spending by seeing just how many apps were installed per advertising dollar. Here, the trend had been mostly flat for three quarters before rising 20% in Q4, but compared to the previous year, cost per install actually declined by 14 per cent as the volume of app installs grew faster than spending.”