Predicted: By 2017, Instagram mobile ad revenue will hit $2.81 billion

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Now that Instagram is opening up, there is a lot of pent-up demand. The rollout of new features over the next several months means that by the end of 2015, Instagram will have a host of new ad products for advertisers large and small. In particular, Instagram advertisers will be able to use a full slate of Facebook targeting tools, including the popular Custom Audiences feature. That will be a key drawing card,” say Debra Aho Williamson, eMarketer principal analyst.

eMarketer’s upcoming report, “Instagram Advertising: What Marketers Need to Know,” says Instagram will bring in $595 million in mobile ad revenues worldwide this year and by 2017, their global mobile ad revenues will reach $2.81 billion.
This report features eMarketer’s first forecast for Instagram revenues, as well as an analysis of what marketers should know about Instagram’s user base and its new ad products, including best practices for getting the most out of them.

Instagram does not currently have a desktop-based ad product; eMarketer’s estimates for Instagram ad revenues are mobile-only. Instagram’s ad revenues will make up 5.0% of Facebook’s mobile ad revenues this year, and that share will increase to 14.0% in 2017, eMarketer forecasts. In the US, respective figures will come in at 10.7% and 28.0% in 2017.

Throughout the three-year forecast period, Instagram will make the vast majority of its ad dollars in the US, though non-US revenues will comprise a growing share of the pie. eMarketer forecasts that Instagram will have just $30 million in ad revenues outside the US this year, or 5.0% of the total.

Meanwhile, the US will account for 92.0% of the total in 2016 and 85.0% in 2017. As of July this year, Instagram advertising is available in only seven international markets: Australia, Brazil, Canada, France, Germany, Japan and the UK.

Instagram’s monthly US user base increased nearly 60% in 2014 to 64.2 million people, eMarketer estimates. By 2019, over one-third of the country’s population is expected to use the social network, amounting to 111.6 million consumers.

In a sign of just how quickly Instagram is expected to grow in the US, eMarketer forecasts that it will have higher net mobile display ad revenues than both Google and Twitter in 2017. Last year, Instagram surpassed Twitter to become the second-largest social network in the US. Twitter’s US user base grew 12.1% in 2014 to reach 48.4 million users.

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