Instagram reached a million monthly active advertisers, five times the number it had a year ago. The Facebook-owned platform touted the number as a “milestone” in its quest to win over brands.

For brands, the victory may be less apparent. Instagram’s change to an algorithmic format has cut into their organic reach, according to L2’s Social Platforms report. While the brands in the study posted more frequently in Q3 2016 than the same period in the previous year, interactions decreased by 30% – meaning that brands can no longer garner more engagement just by posting more frequently.

Instagram post frequency

Just as on parent Facebook, brands will need to turn to promoted posts to generate reach on the platform. Today’s announcement indicates many are already doing so – adding an additional burden to their social budgets.

However, the switch to promoted posts could also benefit brands, as it creates a new opportunity for focused targeting. L2’s study finds that many verticals recently increased spend on Facebook in efforts to target specific consumers. That’s particularly true in Luxury sectors, where targeted Facebook ads represent a significant cost savings over the traditional print version. Fashion and Watches & Jewelry brands hiked their ratio of promoted posts from 12% and 14% to 21% and 20%, respectively, according to the study. Brands may find similar opportunities on Instagram.

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