August 5, 2015
The highly popular mobile app, Instagram has had no trouble reaching the top of the social media trend chain; however, up until now, its financial picture has been harder for experts to make out. But the result of a recent forecast from eMarket puts the Facebook unit in a very gratifying light.
According to the survey, Instagram’s mobile ad revenues will reach $2.81 billion by 2017, accounting for over 10% of Facebook’s global ad revenues. If this holds true, Instagram will end up having higher net mobile display ad revenues than both Google and Twitter. Furthermore, Instagram could generate as much as $595 million in worldwide advertising revenues this year according to eMarket.
The company recently expanded its ad offering by opening up a self-service way for brands to buy ads through an API, extended Facebook’s ad targeting tool to Instagram advertisers, and expanded the type of ads it sells to include direct response ads.
The key to Instagram’s mobile display ad growth is a shift from ads that retailers and other advertisers use to market their brands into what the platform calls “action-oriented” ads. Such ads aim to drive a specific action directly from the ad, including a Buy button that sends shoppers to a retailer’s e-commerce site, a mobile app download ad and a Sign Up ad that encourages consumers to sign up for a website or service.
Debra Aho Williamson, eMarketer’s principal analyst, says: “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.”
Even though the majority of Instagram’s ad dollars will be made up from the U.S. where the company holds over 64.2 million users, international revenues will begin to contribute to the share as well. Earlier this month, the company revealed it has 14 million users in the UK and availability in seven international markets.
There is no doubt that the photo-sharing app will be a force to reckon with in the near future. By 2019, over one-third of the country’s population is expected to use the social network — amounting to 111.6 million consumers. And even though Google will still be ahead of Instagram in terms of overall mobile revenue due to the bulk of its money being made from search ads, Instagram is certainly poised for rapid growth over the next few years.