Forecast: Instagram Might Pull in $2.81 Billion in Ad Revenue by 2017

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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.

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.

emarketer

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.

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