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Instagram Generates $20 Billion in Ad Revenue

As Facebook continues to monetise Instagram, the platform generated more ad revenue than YouTube last year.

Last year, Jefferies forecasted that Instagram would generate $14 billion in revenue in 2019, which was around 20% of how much total revenue Facebook was expected to generate. 

Facebook-owned Instagram has reportedly smashed the prediction having generated a whopping $20 billion in advertising revenue last year – more than a quarter of Facebook’s overall revenue – according to Bloomberg. 

For comparison, that tops YouTube’s annual ad sales, which Google revealed for the first time ever generated $15.1 billion and contributed roughly 10% to all Google revenue.  

When Facebook acquired Instagram for around $700 million, Instagram had no model for bringing in revenue. Ever since Instagram has been focusing on monetising the platform further, and similarly to Facebook, ads now appear in between user’s Stories and posts in feeds and on the Explore tab. It has given brands the ability to sell products directly from the app with its Checkout feature and has allowed creators to access Ads Manager, which uses the same tools like Facebook, to bring more transparency to branded content and better coordinate brand deals. With the platform becoming increasingly aligned with Facebook’s future as revenue from Facebook’s core business slows, advertisers continue to spend on the platform. Last year, advertisers saw four times as much engagement on Instagram compared to Facebook. 

“The platform continued to deliver strong results thanks to the combination of audience scale, engaging content, and advertising precision,” commented Aaron Goldman, CMO at marketing technology company 4C. 

Stories expected to grow 

The news comes at a time when Facebook is emphasising the integration of its “family of apps.” It doesn’t disclose revenue for Instagram separately in its earnings report, instead noting that most Instagram users are also Facebook or Messenger users. 

“Our Family metrics represent our estimates of the underlying number of unique people using one or more of Facebook, Instagram, Messenger, and/or WhatsApp,” Facebook stated in the report.

The company estimates 2.7 billion people around the world are using Facebook, Instagram, WhatsApp or Messenger each month. In total, Facebook generated around $70.7 billion in revenue last year, most of which came from advertising. Instagram was estimated to be worth more than $100 billion in 2018; a figure only set to rise given the recent revenue report. 

“Looking ahead we expect to see continued growth as the Stories format continues to get traction with both consumers and brands. We are also seeing strength across Facebook and Instagram with video ads as part of a cross-channel approach to managing reach and frequency. Additionally, the rollout of Instagram checkout is helping bring more commercial intent to the platform which will further drive positive business outcomes for marketers,” continued Goldman. 

 

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