• by Gavin O'Malley  @mp_gavin, June 2, 2015

While lusting after Instagram’s young users, brands have been less attracted to the network’s limited ad formats and nearly nonexistent audience targeting services.

Trying to change all that, the Facebook unit is expanding its ad offerings to include “action-oriented” direct-response ad formats, along with better targeting capabilities and easier access for smaller brands.

Working directly with Facebook's ad department, Instagram soon plans to help brands reach users based on standard demographics and lifestyle interests, as well as information that businesses already know about their own customers.

In the name of more relevant ad experiences, Instagram is promising to improve the feedback mechanisms within its network to give users greater control over the ads they see. 

To broaden its base of advertisers large and small, Instagram is also working to make advertising available through an Ads API -- along with Facebook ad buying interfaces -- over the coming months.

Analysts on Tuesday said the changes are a big deal. “These updates completely change the character and nature of Instagram advertising," said Debra Aho Williamson, principal analyst at eMarketer. "New ways to target and an API are both things that advertisers have been asking for for a long time."

Over the past 18 months, Instagram has slowly rolled out a number of ad units. Most recently, it introduced Carousel ads, which encourage users to swipe left for additional images, and -- later in the “carousel” -- a link to a brand's mobile site.

So far, Instagram says its ad units have performed well. Across more than 475 campaigns measured globally with Nielsen Brand Effect, ad recall from sponsored posts on Instagram was nearly 300% higher than Nielsen's norms for online advertising. According to Facebook, there are currently more than 2 million advertisers that actively use its network to market their businesses.

To leverage the best of Facebook's infrastructure for buying, managing and measuring the success of ads on Instagram, the social giant will start by opening the Instagram Ads API to a select group of Facebook Marketing Partners and agencies, and then expand globally throughout the year. 

Earlier this year, Facebook CEO Mark Zuckerberg said Instagram holds plenty of monetization potential. Yet, Facebook’s primary goal is to increase the quality of Instagram’s user experience, he said.

Facebook's mobile advertising revenues -- including Instagram, for which the company has not yet revealed revenue figures -- totaled $7.42 billion worldwide in 2014, a 135.7% increase from 2013. That figure accounted for 17.4% of the $42.63 billion global mobile ad market, in 2014 -- trailing only Google, which owned 38.2% of the worldwide mobile advertising market, last year.

This year, more than 60% of all U.S. teens 12 to 17 will be on Instagram, while 50% of U.S. adults 18 to 24 will regularly use the service, according to eMarketer estimates.

Domestically, there is still plenty of room for growth. In fact, just 27.6% of the total U.S. population will be on Instagram, this year.

True to form, the largest number of U.S. Instagram users is in the 25 to 34 age group, eMarketer estimates. This year, 26.2% of Instagram's 77.6 million total U.S. monthly users will be within the 25-to-34 age group -- or 20.3 million users -- and that group will maintain the largest portion of the U.S. Instagram audience through 2019.