According to a forecast by emarketer.com, Instagram will surpass Twitter and Google in US mobile ad revenue by 2017. Instagram is a popular social networking app and it has an above average engagement when you compare it with other social media platforms.
A 2014 report by Forrester say that Instagram has the highest Brand Engagement rate at 4.21% which is higher than Facebook (0.07%) or Twitter (0.03%). Recently, Instagram posted on their blog about their next steps to attract more advertisers to the platform by expanding ad offerings, making it easier to buy ads on Instagram & making it more capable to target potential customers.
The report also says that they forecast the company will pull in $595 million in mobile ad revenues this year. Adding to the fact that it will generate $2.81 billion in mobile ad revenue by 2017 means that it would have contributed more than 10% of Facebook’s overall ad income and it will only go higher. In 2012, didn’t have any any revenue for example and had reported a $2.7 million loss. This is quite a turnaround for the company.
Well, how has Instagram been able to turn around from absolutely no revenue in 2012 to an expected $600 million revenue this year? Well it is thanks to Facebook’s Custom Audiences & Lookalike Audiences which enables an advertiser to create a list of audiences you want to reach with your ads and also find people with the same shared demographics so that the adverts can reach more people. Facebook has a reported two million advertisers and Instagram wants to partner with a select group of these partners as they plan to leverage on Facebook’s infrastructure as a measure to determine the success of Instagram ads.
Instagram was a really good buy by Facebook and by this efforts, it seems its ROI will be great by any means. With a strong 300 million monthly user base and growing, its overall contribution on Facebook’s share of revenue will only become more significant in the coming years.