Exercise 60 – What metrics you would look at as a product manager for Instagram ads?

Post and review answers and feedback to answers in the comments section of this post.

See also:

How to answer a metrics question in a product manager job interview

List of metrics questions for product manager job interviews

Leave a Reply

newest oldest most voted
Notify of

Typically, when I am looking for success metrics, auxillary metrics and balancing metrics for my products, I do the following:
1. What are the metrics that make my product successful? In this case, my product is – Instagram ads
2. What are the metrics that make my eco-system successful? – In this case, the eco-system is the Instagram news feed and stories overall.
3. What are the metrics that I need to watch out for (which might show negative impact to user experience) because of my product?
If I am looking at the first category of metrics that are exclusive to my product (Instagram ads) – I would look at:
1. Acquisition: Ad impressions (overall)- How many visits actually see an ad in their news feed? Number of impressions per ad type?
2. Engagement: Ad click through rates (overall)- How many visits with ad impressions, end up clicking on an ad? Click through rate by ad type.
3. Monetization/ROI : Ad revenue overall – Overall revenue from impressions, click through rate and conversion at the 3rd party ad site through Instagram. I would also look at revenue by vendor type to see which ads are doing better than the others (to understand ROI for each ad type).
4. I would look for the above metrics and watch performance of these metrics by Age, sex, ethnicity, country, interest segments to again tweak the segmentation of ad viewers and improving ROI of ads.

Second and Third category of metrics: Ecosystem metrics and metrics to watch out for which might show negative impact to user experience
1. Ad frequency: What is the ratio of news feed items/ad ratio? For every 100 instagram entries in your news feed, how many ads do you see? As the ratio of ads/news feed item goes up – what happens? (see next bullet)
2. Impact on Usage and Retention overall: This could be A/B tested – For visits with higher ad/regular feed item ratio vs visits with lower ad/feed item ratio – is there a difference in daily and monthly active usage? What I mean by usage is: Is there a difference in user activity – passive viewing, less time spent per visit, lower length of scroll on visits, lesser likes/shares for visits with higher number of ads vs the opposite impact on visits with fewer ads in the news feed?
3. What is the impact of ad/feed ratio on retention overall – do we see repeat visits decrease for users who see more ads in their news feed?
4. I would also test with static ads vs video ads, shorter length ads vs longer length ads, relevancy algorithm tweaking in addition to number of ads in news feed to see if the overall health metrics around daily/monthly usage and retention can be stabilized.
5. Ultimately I would continue to monitor app store ratings of Instagram, app downloads and app deletes as I watch ad impressions, click throughs and revenue to balance the potential negative effects of ads on the overall experience of Instagram.


First we discuss and list out the goal of Instagram ads (Customer Goals, Business Goals)

Customer Goals: There are two types of customers (Ad creator, Ad viewer)
1. Ad creator:
a. The ad should lead to a certain business goal (Increase visit to website, Awareness building, Lead generation etc)
b. Easy to create an ad, publish an ad (Creating the ad, Selecting Media, writing text for the ad)
c. Targeting the right customer
d. Posting the ad for the defined metrics (Demography, where will it be shown, how long wil it shown for)
e. Getting reactions (Hearts, comments)
f. Getting direct messages from leads
2. Ad Viewer
a. Relevant ads
b. Frequency of ads (there should not be so many ads, that the customers gets annoyed)
c. Ease of finding the Action buttons
d. Ease of reacting
e. Ease of setting preferences for the ad

Business Goals:
3. Engagement: We want users to find relevant products/ services through ads
4. Helping the community: Ads should help individuals or business create awareness about their services/ products.
5. Revenue: Instagram ads should be helping generate revenue
6. Retention: Decrease the churn or not effect retention at all, increase the retention

Based on the above discussed goals, we will figure out the metrics that measure these goals.


Customer Goals:
1. Ad creator
a. % of times the ad reached its defined/ promised goal (if instagram said, that it can reach 100k people, it would lead to 50 clicks)
b. Average time taken to create an ad
c. No of times ad creator was satisfied with the promotion
d. As Facebook’s goal is to create communities and help them, Instagram would want to make sure that the cost per ad is as optimal as possible. So we can have a metric to internally measure (given a set of conditions), how well the ad did in terms of (cost per ad, cost per impression). This is a metric to see how well our ad placement is doing.
i. Cost per ad objective
ii. A/B test – we will take a control group of ads and a test group of ads. (Both the ads will have the same settings (target audience, budget, goal, ad type, images etc). But we will test our algorithm as to how well we can place the ads to make sure that the cost per goal goes down.
e. Average no of reactions an ad gets compared to an organic post
i. Here also we can have an A/B test where we have an organic post as the control and the ad which is exactly similar as the organic post and see which one is getting more reactions.
f. No of direct messages to a business page 7 days post ad delivery.
i. If the direct message landed via clicking through an ad and then landing on the business page on instagram
2. Ad Viewer
a. No of times a user hides an ad
b. No of ads per organic posts
i. A/B testing to see how many number of ads per organic post is optimal in a feed.

Business Goals:
3. Engagement
a. Time spent scrolling through an ad – No of impressions
b. No of times an ad was turned off
c. No of times the app was closed while going through an ad
d. No of click through rates
4. Revenue
a. No of ads being created per day
b. % of budget utilized per ad
5. Retention:
a. Indirect measure: Can do an A/B test to figure out if ads lead to churn.

Metric Prioritization:
Whether a metric is important or not, depends on how strongly it reflects the goal, how direct and easy to the metric is. So lets classify the metrics
1a. Direct measure of success for ad creator as well as revenue metric for Instagram business goal
1b. Probably an indirect measure
1c. Direct and strong measure of ad success for the ad creator, and thus will ultimately lead to more ads being created and thus measure the business success
1d. Cost per ad objective – If we can optimize this, more ads will be created. This is very important.
1e. Direct measure if the ad objective is to get more likes, indirect measure otherwise.
1f: Indirect measure, the message could be related to the ad or maybe not.

2a. Very important to understand the relevancy of the ads
2b. Very important to understand how many ads need to be posted

3a,b : Covered previously
3c: Key measure, to see if people are getting anonoyed by the ads.

4a. Very important metric to track revenue ultimatelu
4b. Metric will show the success of the ad placement and the revenue as well.

5a. Indirect measure

Conclusion: Metrics to track (1a, 1c, 1d, 1e, 2a, 2b, 3c, 4a, 4b)

Scott Lin

To tackle this question, I will first look at the goal of Instagram Ads. Instagram ads are surfaced as a user is surfing through instagram content, whether it’s through scrolling through their daily feeds, or looking at instagram stories. The ads are placed as a monetization opportunity.

From the get go, there are some general metrics to look at when looking at it from this point of view.

– Daily Active Users
– New Users
– Retention
– Number of Connections

– Time spent on instagram
– Likes
– Comments
– Times Posted
– Times logged onto Instagram a day
– Times you friend somebody

– Ad impressions
– Ad clickthrough Rate

The purpose of these metrics is to get a generalized view on how users are interacting with instagram. The business model is built on social networking and so the more time one spends on instagram, the more content they product on instagram, will have a net effect throughout their connections causing more and more people to be engaged with instagram. This will work to cause stability in the product and also help surface more and more ads.

Diving deeper into the funnel, one might be concerned with specific features as it relates to its ability to surface ads.

– Daily Active Users on instagram feed
– Time spent on instagram feed
– Number of posts on instagram feed
– Number of likes on instagram feed
– Number of comments on instagram feed
– Ads impressions on instagram feed
– Ad clickthrough Rate on instagram feed

You can replace instagram feed with other instagram features like Stories. The purpose of these is to get a better picture specific features and if there are optimizations that can be done into the funnel.

Finally, I would look into segmentation of users if that is a strategy that instagram employs. This is to check if the ads are actually surfaced to the right clientel. You can segment all the above metrics into

– Age
– Sex
– Ethnicity
– Country of origin
– Interests

This will help you ensure that the ads are reaching the right people at the right time.

I would look at these metrics both as an absolute numbers, but also as a funnel so you can see where in the funnel you might gain the most from iteration. From before a user join, you can also take a look at sources of download (whether it’s through invites or through Ads). In my previous job, we always look at a catch all metric like LTV where you can compare the lifetime value of a user and the cost it took to get the user.


Hi Scott,
Thanks for the answer. It’s a good answer and highlights the key areas that Instagram Ads can impact, specially Instram newsfeed. You focused on the client journey stage that Instagram Ads can potentially impact the most (engagement). Couple things I would have also covered in my answer:
– List a couple metrics to represent how we measure retention.
– Look into how it impacts conversion of new users. Does it have an impact in converting new users to active users? If it does, maybe Instagram ads should not be presented until user meets certain engagement criteria
– Perhaps group the metrics in the order of user journey so that the interviewer can easily follow the steps (relevant stages in this case would be conversion, engagement, retention, and monetization).
Hope it helps. Overall, I think it’s a good answer.

Scott Lin

Thanks Bijan!