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lo-res_164853169-sInstagram Stories are a hit for retailers and publishers seeking brand exposure. The advertisements, which run as either a 15-second video or a 5-second static photo, reportedly reach up to 150 million people a day. Perhaps even more notably, one-third of the most viewed stories to date have come from businesses.

Despite the great excitement about these viewership trends, especially considering that the fledgling service launched only in the summer of 2016, there is some concern about the current ad revenue rules imposed by Instagram. Unlike the platform’s main competitor, Snapchat Discovery, publishers do not earn a share of revenue from the Instagram Stories. Some publishers are content to wait and see how Instagram’s policy may evolve, predicting that eventually it will share such revenue, or else have turned to alternative forms of compensation. But others are starting to complain that they expect to earn returns on the time and resources they devote to creating appealing, high-quality, professional content for the social media platform.

Thus far, Instagram’s representatives have not commented on how the Instagram Stories business model may evolve. Historically though, Instagram has followed the lead of its parent company Facebook. Facebook recently started to test a new method for placing advertising, such that the ad revenue scheme developed for this new advertising model might inform the policies of Instagram Stories in the future.

Furthermore, even as the issues surrounding ways to monetize the new service continue to swirl, many companies seem content with the greater brand exposure they have achieved as a result of the Instagram Stories platform. For example, Bustle, a digital outlet aimed at women, saw its Instagram audience increase from 200,000 to 1.4 million viewers in a single year. In addition, because publishers can charge marketers for sponsored content and keep the revenues, creating a valuable brand on Instagram Stories may produce revenue in the long run, even without a revenue-sharing program.

Discussion Questions:

  1. Should publishers demand a share of ad revenue from Instagram Stories?
  2. Should Instagram share these revenues with publishers?

Source: Mike Shields, “Publishers Aren’t Seeing Revenue from Instagram’s New Ads,” The Wall Street Journal, January 11, 2017