Dive Brief:
- Along with almost every other social media platform, Instagram is pushing hard for ad revenue and one group has put a cap on what it might earn based on its user base and the number of posts they view each day.
- MoffettNathanson used those metrics along with statements by Facebook CEO Mark Zuckerberg to determine Instagram will max out at $5 billion in advertising revenue.
- Among Instagram’s latest ad moves is the expansion of video ads from 15 to 30 seconds.
Dive Insight:
Guessing social media advertising revenue more than a few weeks out is little better than parsing the dregs of a tea cup, but MoffettNathanson went on the record predicting Instagram will hit a ceiling of $5 billion in ad revenue over the next three years.
The prediction was based on current user stats and statements by Facebook, Instagram’s parent company, Chief Executive Zuckerberg. Of the 300 million users Instagram currently has, 70% of that user base is outside of the U.S. market. MoffettNathanson estimates that about 150 million Instagram users see about 60 posts each day. Further, their analysts say each Instagram ad generates between $3 and $6 in revenue per user who clicks on the ad, but they say the photo-sharing app could raise rates for ads based on recent upgrades it has pushed out.
For marketers, Instagram has introduced several new ad options including expanding video ads from 15 to 30 seconds, as well as getting away from its signature square to offer vertical video and wide-screen images. Another new option for marketers is a premium product called Marquee that offers brands mass awareness and an expanded reach for a limited time and designed for special events.
