Instagram announced today that it is rolling out new ad formats, including action-oriented ads with "Shop Now" buttons for retailers.

The new ads format will effectively function as product listing ads and create new opportunities for retailers to reach shoppers on the popular social network.

Instagram Product Ads

According to the company's announcement, the roll-out will focus on three key areas:

  • Expanding ad offerings to include action-oriented ads, which include "Shop Now" buttons for retailers
  • Enabling more targeting capabilities
  • And making it easier for businesses of all sizes to buy ads on Instagram

Shop Now ads will appear as in-app product listings that will take users to merchants' sites within the app's native browser. That means users will remain inside Instagram while shopping on retail sites. It's been Instagram's M.O. to keep users from navigating away from its app (that's why it won’t allow its photos to appear in-line on Twitter), so the move makes sense. What's more, the platform's visual nature will give retailers the opportunity to highlight the aesthetic qualities of its products.

People come to Instagram to follow their passions, from travel and fashion to cars and entertainment. They want to see ads that reflect the things they care about.

Instagram has been the cool kid of social media for about three years now, but it wasn't until today that it became the cool kid in online retail too. Over the past year, Instagram has been trying out different ad types and the results should be encouraging for retailers still on the fence.

Across more than 475 campaigns measured globally with Nielsen Brand Effect, ad recall from sponsored posts on Instagram was 2.9x higher than Nielsen’s norms for online advertising.

In addition to the new ad formats, Instagram is also planning to integrate Facebook's demographic targeting capabilities to its ads. Using this targeting technology, retailers will now be able to target Instagram users based on demographics and interests, as well as information retailers have about their customers.

Stay tuned for more details on how retailers can take advantage of this great opportunity.