Instagram Advertising 2017: Big Strides in Its First Year, but Questions Remain - eMarketer
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Instagram Advertising 2017: Big Strides in Its First Year, but Questions Remain

eMarketer Report

By: eMarketer

Published: November 02, 2016

Jump to: Executive Summary | Table of Contents | List of Charts

Executive Summary

In September 2015, Instagram opened up to ads. This year, the company is on track to bring in more than $1.85 billion in ad revenues worldwide. Being owned by Facebook makes it easy for advertisers to extend their buys, but ad performance on Instagram is mixed—and Snapchat is stealing some of its thunder.

  • Instagram’s ad business is on a rapid trajectory. eMarketer expects it will surpass $6.8 billion worldwide by 2018. Surveys of marketers and agencies indicate continued interest in advertising on Instagram.
  • Facebook’s decision to integrate Instagram into its ad system has helped boost revenues. Advertisers appreciate the ability to use familiar tools for ad buying, targeting and measurement. But using Facebook and Instagram together isn’t always the right answer.
  • The jury is still out on Instagram’s effectiveness for direct-response advertising. Although there have been some success stories, Instagram continues to tinker with the ad formats to drive more user engagement and response.
  • The rapid rise of Snapchat is putting pressure on Instagram. Though Instagram has more users, Snapchat is gaining, particularly among teens and young adults. In addition, there is mounting evidence that suggests Instagram is losing out to its rival when it comes to frequency and intensity of usage.
  • Influencer marketing is prevalent on Instagram, and advertisers are spending upward of $500 million a year on it, eMarketer estimates. Some of this is revenue that could be going to Instagram instead.
  • Instagram hasn’t yet broken through as a leader in video usage or video advertising. Considering the emphasis that its parent Facebook is putting on video, Instagram could be losing out on valuable digital video ad revenues.

"Instagram will generate significantly more revenues than Snapchat for the foreseeable future."

Table of Contents

Advertising Expectations Are High

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Facebook Integration Has Been Mostly Positive

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Jury Still Out on Instagram’s Value for Direct Response

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The Threat from Snapchat Is Real

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Influencer Marketing Has the Potential to Impact Ad Spending

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Video Isn’t as Common as It Should Be

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30 charts are included in the full report:

Instagram Advertising 2017: Big Strides in Its First Year, but Questions Remain

Instagram vs. Snapchat Ad Revenues Worldwide, 2015-2018 (millions)

Advertising Expectations Are High

Instagram Net Mobile Ad Revenues Worldwide, US vs. Non-US, 2015-2018 (billions, % change and % of total)

Instagram Net Mobile Ad Revenue Share of Facebook Mobile Ad Revenues Worldwide, US vs. Non-US, 2015-2018

Comparative Estimates: Instagram Ad Revenues Worldwide, 2015-2019 (billions)

Marketer and Agency Interest Remains High

US Marketers Who Have Spent/Plan to Spend Advertising Dollars on Instagram, Feb & Sep 2016 (% of respondents)

Social Media Platforms that US Ad Agency Professionals Are Most Likely to Use for Client Campaigns, Q1 2015 & Q1 2016 (% of respondents)

Jury Still Out on Instagram’s Value for Direct Response

Facebook and Instagram Ad Benchmarks Worldwide: CPM, CPC and CTR, Feb 1-April 30, 2016 (among impressions served by Nanigans)

Instagram Ad Benchmarks in Australia, the UK and the US: CPM, Q1 & Q2 2016 (based on impressions served by Advertising Studio)

Learn More

US Instagram Ad Benchmarks: CPM, CPC and CTR, Q3 2015-Q1 2016 (among impressions served by Kinetic Social)

Shop Now

Social Media Platforms Used by US Social Media Users to Shop for Products, May 2016 (% of respondents)

Install Now

Share of Mobile Ads Served on Instagram and Pinterest Worldwide, App Install vs. Non-App-Install, May-June 2016 (% of total among Sensor Tower panelist impressions)

The Threat from Snapchat Is Real

US Instagram Users and Penetration, 2015-2020 (millions, % change and % of population)

US Snapchat Users and Penetration, 2014-2020

Social Media Platforms Actively Used by US Internet Users, by Age, May 2016 (% of respondents in each group)

Snapchat Users Visit More Often

US Social Media Users Who Use Select Social Media Platforms Daily, June 2016 (% of respondents)

US Facebook, Instagram & Snapchat Daily Users, by Age, Aug 2016 (% of respondents in each group)

Frequency with Which US College Student Internet Users Use Select Social Media Sites/Apps, March 2016 (% of respondents)

Daily Time Spent on Select Social Media Platforms by Social Media Users Worldwide, Q2 2016 (hrs:mins among users of each platform)

Social Media Sites/Apps Used Daily by US Teen vs. Millennial Internet Users, April 2016 (% of respondents in each group)

US Internet Users Who Have an Instagram Account and View Instagram Stories, Aug 2016 (% of respondents)

Ad Revenues

Instagram vs. Snapchat Ad Revenues Worldwide, 2015-2018 (millions)

Influencer Marketing Has the Potential to Impact Ad Spending

Instagram Ad Revenues* vs. Influencer Marketing Revenues** Worldwide, 2016 (millions)

Social Media Platforms on Which US Marketers Seek Influencers, Aug 2016 (% of respondents)

Most Effective Social Media Platform for Engaging Their Audience According to Microinfluencers* Worldwide**, June 2016 (% of respondents)

Video Isn’t as Common as It Should Be

Digital Video Platforms Used by US Digital Video Viewers, by Age, March 2016 (% of respondents in each group)

Social Media Platforms Used by US Young Adult* Mobile Video Viewers to View Mobile Video Content, June 2016 (% of respondents)

Video Advertising

Social Media Platforms on Which US Digital Advertising Professionals Have Run Video Campaigns, April 2016 (% of respondents)

US Marketers Who Plan to Use Social Video Ads, by Platform, May 2016 (% of respondents)

US Instagram Ad Spending Share, by Format, Q3 2015-Q1 2016 (% of total impressions served by Kinetic Social)

Instagram Ad Benchmarks Worldwide: Video vs. Nonvideo* CPM, Jan-June 2016 (based on impressions served by Brand Networks)