Per our discussions with Kenshoo, Instagram's US rollout is expected to occur in a few weeks, with the same sales team selling Facebook also selling Instagram advertising, an important point as FB has a large, experienced salesforce and 2MM advertisers on the platform; we view this aspect as bullish for Instagram. In terms of ad loads, our sense from discussions is that they will grow slowly, though recall, when FB turned mobile newsfeed ads on, the ad load grew from 0 to 5% within a year (on avg). We also got the sense that every advertiser will want to try Instagram, we saw significant pent up demand for Instagram in our Ad Buyer Survey report earlier this year (see LINK ). In terms of the API, it will take Instagram partners several months to fully ramp. Recall, we estimate Instagram revenue of ~$700MM in '15 growing to $5.8BN in '20, a 53% CAGR.
Operating Metrics Commentary Generally Positive. Although dollars are shifting between ad platforms, GOOG search budgets are still rising y/y to the tune of 20% among key direct response advertisers (although modestly lower, 15%+ y/y among smaller, more traditional retailers). Traffic on desktop is growing modestly y/y, but aggregate traffic growth is being driven by mobile. As a result, the pricing disparity between mobile and desktop has shrunk significantly and remains on-track to be near parity by year-end. Within some local keywords, mobile is priced well above desktop.
Product Advancements Coming on Mobile. The overarching comment was that since GOOG removed granular advertiser control with Enhanced Campaigns, the company is now compensating by rolling out useful tools for advertisers. Looking ahead, it was speculated the GOOG buy-button could have a significant impact in the future, but could take longer to mature than PLAs and may see greater adoption among smaller retailers. Also, Google is beginning to adopt FB-like targeting measures within Search. Termed Remarketing, this feature allows an advertiser like Hugo Boss to allow keyword bids within an audience that may have browsed luxury suits. Mobile remains a huge area of product focus, but the recent changes to the search algorithm related to mobile website quality was not hugely disruptive.
Introducing Micromoments. By way of stressing the importance of mobile enhancements and attribution, EliteSEM discussed GOOG data released today (LINK). The data includes the following stats: 1) 82% of smartphone users turn to their phone to influence a purchase decision while in a store; 2) 62% of smartphone users are more likely to take action right away toward solving an unexpected problem or new task because they have a smartphone; 3) 91% of smartphone users turn to their phone for ideas while doing a given task.
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