Instagram’s mobile ad revenue is projected to reach $2.81 billion by 2017, which would put it ahead of Google and Twitter. Marketers say that the distinct advantage that puts Instagram ahead of the competition will be from the advanced marketing tools and database provided by parent company Facebook – who will earn about 10% of their 2017 revenue from the picture-based social media service.
Much of this change can be attributed to Instagram’s new API offerings, which expand its ad-buying capabilities to include direct response and targeted advertisements. The new ad system will allow Instagram to draw upon the powerful targeting capabilities of Facebook’s Custom Audiences feature – a considerable improvement over its older targeting protocol which was limited to finding audiences based only on gender, age, and country of origin. This lead to a tendency for Instagram’s adspace to be dominated by highly visual branded advertisements for retailers and the like.
Custom Audiences, on the other hand, opens up the door for a wider variety of advertisers to reach out to Instagram’s sizable audience. Instagram is already the fastest-growing major social network and the youngest, which means there’s a huge sample sizes that direct response advertisers are now able to access via new kinds of ads with options like “BUY NOW” or “SIGN UP.”
Since Facebook owns Instagram and both share millions of common users, there’s also a huge opportunity for advertisers to reach users on both platforms through the same campaign. The unique relationship that both companies have with each other provides a fantastic platform that marketers can use to learn more about their existing customer base and work to expand it.