DigitalNews Today: Instagram Ads On Track to Pass Google and Twitter With Facebook’s Help

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Instagram Ads On Track to Pass Google and Twitter With Facebook’s Help

Wednesday, July 29, 2015

Proving its an advertising platform that should be top of mind for brand marketers, Instagram will make $595 million in global mobile ad revenue this year, according to eMarketer’s first-ever report forecasting on ad spending by brands on the visual social network, “Instagram 
Advertising: What Marketers Need to Know.”

By 2017, the Facebook-owned photo- and video-sharing app’s global mobile ad revenues will reach $2.81 billion, about 10 percent of Facebook’s global ad revenues. Instagram is also on track to pass Google and Twitter in US mobile display ad revenues by that year.

“Now that Instagram is opening up, there is a lot of pent-up demand,” says eMarketer analyst Debra Aho Williamson.

“The rollout of new features over the next several months means that by the end of 2015, Instagram will have a host of new ad products for advertisers large and small. In particular, Instagram advertisers will be able to use a full slate of Facebook targeting tools, including the popular Custom Audiences feature. That will be a key drawing card.”

With 300 million users and an average of 70 million photos uploaded per day, Instagram’s pitch to brands on the platform is to be creative, be engaging and be original, as it showcases in its inspiration gallery of brands such as Warby Parker and Chobani that are elevating their creative to capture the Instagram community. It’s also promoting new ad format such as its interactive carousel and PanoGrams, which GM has been testing.

In the US alone, Instagram’s monthly user base grew to 64.2 million people by the end of last year. eMarketer projects that by 2019 more than one-third of America’s population, or about 111.6 million consumers, will be Instagrammers.

Instagram has been running advertising in the U.S. since October 2013 and internationally since last year. While not disclosed ad revenue numbers but, “Facebook remains well positioned to gain significant share of online advertising, particularly mobile advertising,” said Sterne Agee analyst Arvind Bhatia, according to USA Today. Bhatia expects “monetization of Instagram will accelerate in the back half of 2015.”

Williamson agrees.”The Facebook family is starting to gel, and we’re getting a better idea of how the company’s various properties are coming together,” she tells USA Today. “However, we’re still waiting for indications of how much ad revenue Facebook is getting from Instagram.”

For its three-year forecast, eMarketer notes the majority of Instagram’s ad dollars will come from domestic sources and in 2015, only $30 million in ad revenues have come from outside the US, or about five percent of the total.

And therein lies the rub, eMarketer adds: “Internationally, Instagram’s growth hasn’t been as strong, and other mobile social apps will continue to challenge it. So far, however, brand engagement on the platform has been high, and coupled with a solidly growing user base and new ad offerings, the mobile ad revenue picture looks bright.”

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