Instagram appears to be the picture of health from an advertising perspective.
The social media site will attract US$595 million in global ad revenues this year, with advertising set to skyrocket in the next two years, according to research firm eMarketer.
In its first-ever forecast on the Facebook-owned social sharing site, eMarketer is calling for “rapid growth” in ad revenue, driven by high demand for its new advertising products, which include direct response, the ability to buy via an API, and enhanced measurement and targeting capabilities.
The report says Instagram’s global ad revenues will reach US$2.81 billion by 2017, accounting for approximately 10% of Facebook’s total revenues and 14% of its mobile advertising revenue – up from 5% currently.
Debra Aho Williamson, principal analyst with eMarketer, says there is a “lot of pent-up [advertiser] demand” for Instagram. The rollout out of new features over the next several months means it will have a hot of new ad products for advertisers of varying sizes.
Williams says the ability to use Facebook targeting tools, including its Custom Audiences feature, will be a “key drawing card” for the social site.
The forecast expects the “vast majority” of Instagram’s advertising revenue to come from inside in the U.S., with non-U.S. revenues expected to account for just US$30 million or 5% of its total this year.
As of July, Instagram advertising is available in just seven international markets: Australia, Brazil, Canada, France, Germany, Japan and the United Kingdom.
The report forecasts Instagram to have higher net mobile display ad revenues than either Google or Twitter in 2017.
Last year, its U.S. user base grew nearly 60% to 64.2 million, surpassing Twitter (48.4 million) as the country’s second largest social network. The report predicts more than one third of the U.S. population – approximately 111.6 million people – will be using Instagram by 2019.
Instagram has now surpassed 300 million global users, but the report says its growth outside the U.S. hasn’t been as strong and it will continue to be challenged by other mobile social apps.
However, the report also notes brand engagement on Instagram has been high, and coupled with a solidly growing user base and new ad offerings, “the mobile ad revenue picture looks bright.”
