Instagram will surpass Google, Twitter in US mobile display ad revenues by 2017
Instagram will bring in $595 million in mobile ad revenues worldwide this year, according to eMarketer’s first-ever forecast of how much advertisers will spend on the social network.
Click Image To Enlarge
We expect to see rapid growth in Instagram’s ad revenues this year and throughout the forecast period—driven by high demand for the social network’s new ad products, which will expand beyond branding to include direct response, the ability to buy ads via an API, and enhanced measurement and targeting features.
By 2017, Instagram’s global mobile ad revenues will reach $2.81 billion, accounting for over 10% of parent company Facebook’s global ad revenues. The forecast will be featured in an upcoming eMarketer report, “Instagram Advertising: What Marketers Need to Know.” This report features eMarketer’s first forecast for Instagram revenues, as well as an analysis of what marketers should know about Instagram’s user base and its new ad products, including best practices for getting the most out of them.
“Now that Instagram is opening up, there is a lot of pent-up demand. 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,” said Debra Aho Williamson, eMarketer principal analyst.
Instagram does not currently have a desktop-based ad product; eMarketer’s estimates for Instagram ad revenues are mobile-only. Instagram’s ad revenues will make up 5.0% of Facebook’s mobile ad revenues this year, and that share will increase to 14.0% in 2017, eMarketer forecasts. In the US, respective figures will come in at 10.7% and 28.0% in 2017.
Click To Enlarge Image
Throughout the three-year forecast period, Instagram will make the vast majority of its ad dollars in the US, though non-US revenues will comprise a growing share of the pie. eMarketer forecasts that Instagram will have just $30 million in ad revenues outside the US this year, or 5.0% of the total. Meanwhile, the US will account for 92.0% of the total in 2016 and 85.0% in 2017. As of July this year, Instagram advertising is available in only seven international markets: Australia, Brazil, Canada, France, Germany, Japan and the UK. Instagram’s monthly US user base increased nearly 60% in 2014 to 64.2 million people, eMarketer estimates. By 2019, over one-third of the country’s population is expected to use the social network, amounting to 111.6 million consumers.
In a sign of just how quickly Instagram is expected to grow in the US, eMarketer forecasts that it will have higher net mobile display ad revenues than both Google and Twitter in 2017. Last year, Instagram surpassed Twitter to become the second-largest social network in the US. Twitter’s US user base grew 12.1% in 2014 to reach 48.4 million users.
Click Image To Enlarge
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.
COMMENTARY: On March 4, 2015, Instagram introduced a new type of ad product that lets readers swipe left to learn more about the brand or product: carousel ads.
Advertisers can now place multiple photos in one sponsored post for consumers to flip through. At the end of the carousel, users have options to click on additional content or visit a website to learn more.
The new ad feature will let brands post multiple images, which users can scroll through by swiping their finger across the phone’s screen, just like users do with Tinder.
Until now, brands have mostly used the app as billboard space to flash ads as users scroll by. The carousel allows for sequential storytelling, developing a narrative over the course of multiple images. The carousel will only be offered on sponsored posts, not to everyday users or non-paying brands.
The links are not a move to attract direct-response, click-driven advertisers, according to a source close to Instagram. This is just the next iteration of brand ads, this source said.
The platform's post-campaign insights will still focus on brand-centric data, like sentiment lift and the affinity that users have for advertisers after seeing their paid posts. Instagram won't measure click-through rates, which would show how many people actually took additional action.
Instagram started selling ads in late October 2013, and its clients have included top brands like Levi's, Ben and Jerry's, Disney and Banana Republic. It started with sponsored images and evolved to offer sponsored videos.
However, there have been limits to Instagram's growth because of how hands-on the company is with its advertisers. The company works closely with brands to make sure their content fits the platform, which is known for its stylishly filtered photos and videos.
Also, there was no way to link ads to websites where brands would like to drive traffic. One digital ad executive said the limitations have kept ad dollars from migrating more quickly to the popular photo app.
A source who saw a preview of today's new features but was not authorized to speak publicly said.
"Why not just keep spending on Facebook until Instagram was ready?"
Today's steps could persuade more brands that Instagram is ready, this person said.
There are signs Instagram is revving up its ad team, according to another agency executive. This source said Instagram now has a more dedicated sales team, instead of one closely tethered to its parent company, Facebook.
The agency executive said Instagram had been very difficult to approach because it had few liaisons to the marketing world, but in recent months that has begun to change.
Instagram also is starting to excite brands because it is clearly attracting consumers. The app topped 300 million users this year. Just today, eMarketer put out a report saying the Instagram would have more than 100 million U.S. users by 2018.
More Brands Are Considerng Instagram
Instagram isn’t showing any signs of slowing down. The online mobile photo-sharing service currently boasts 300 million active users.
It has become the social network for image-based social media marketing.
Forty-five percent of marketers are planning to increase their use of Instagram in 2015. In fact, marketers who spend 40 or more hours per week on social media platforms plan to increase their use of Instagram by as much as 49 percent in 2015.
Click Image To Enlarge
A study by Forrester found that Instagram posts achieved a per-follower engagement rate of 4.21 percent. In other words, Instagram posts generate 120 times more engagement per follower than Twitter and 58 times more than Facebook! It's no wonder that brand marketers are taking more interest in Instagram as an advertising platform
Instagram, Pinterest, Vine, Tumblr, and Snapchat, all of these networks foresaw the importance of visual content and they grasped the opportunity. The social advertising trend is expected to help these networks expand even further.
Instagram Has Corraled the 18-34 Year Old Market
Instagram also appeals to an increasing number brand marketers because it has become the preferred visual social network of choice for the much coveted 18-34 year old market. This is clearly demonstrated in the following chart released by eMarketer:
Click Image To Enlarge
Courtesy of an article dated July 27, 2015 appearing in eMarketer, an article dated March 4, 2015 appearing in Adweek, and an article dated January 21, 2015 appearing in Business2Community
Follow Me: 
Twitter: turk5555 
Facebook: 797743955 
LinkedIn: turk5555
Recent Comments