Advertisers are now flocking to Instagram (FB, TWTR)
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Instagram has become a top digital destination for advertisers.
According to a new report published by socialfresh in collaboration with the Firebrand Group and Simply Measured, approximately 30% of respondents are advertising on Instagram at least once a month, which is about the same as Twitter and half as much as Facebook.
The key point here, though, is that Instagram only opened its doors for all businesses to advertise less than a year ago.
And approximately 42% of respondents said they intend to invest the most in Instagram next year, which edged out Twitter at 41%. Facebook remained in the lead here, as well.
The online survey polled digital marketers in eight countries and multiple industries. The questions asked about their social marketing budgets, current resource utilization, and future plans.
Instagram currently has 200,000 monthly active advertisers, and its new video and dynamic ad offerings should only grow that number.
Instagram has said that time spent watching videos on its platform increased by more than 40% in the last six months, which presents a tremendous opportunity for advertisers. The socialfresh survey asked which content type demonstrated the best ROI, and "video" was the second-most popular answer behind image posts.
To take advantage of this, Instagram recently lengthened its video ads to 60 seconds, which lets advertisers post full TV commercials on the platform and also helps lure advertisers to Instagram and away from YouTube and other digital platforms.
Facebook also just announced that Instagram will now feature dynamic ads, which can target users based on how they have engaged with products online. For example, if you are shopping on an e-commerce site and put a pair of shoes in your shopping cart but don't buy them, Instagram can now target you with an ad for those shoes.
These native ads — or ads that take on the look and feel of the content surrounding them — are taking over digital advertising.
By 2021, native display ad revenue in the US, which includes native in-feed ads on publisher properties and social platforms, will make up 74% of total US display ad revenue, up from a 56% share in 2016, according to new BI Intelligence estimates based off historical data from the Interactive Advertising Bureau (IAB) and PwC, as well as IHS.
The rapid uptick in native's share of display ad revenue can largely be attributed to the dominance of social platforms like Facebook and Twitter — which were early champions of native and rely almost entirely on native formats — as well as the introduction of new programmatic technologies that are making it easier for publishers and advertisers to scale native campaigns.
Margaret Boland, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on native advertising that breaks out native ads into three categories: social native, native-style display, and sponsored content (also referred to as premium native). It provides forecasts for how revenues from these formats will grow over the next five years and looks at what factors, in particular, are driving up spending on each of these ad units. As a note, because revenues from these three types of native content can overlap, it does not provide an overall native forecast. Finally, it lays out some of the challenges that face properties that rely on native ads, namely ad frequency and scalability issues.
Here are some key takeaways from the report:
- Native-display ads, including social native and native ads in-feed on publisher websites, will make up the bulk of native ad revenue from 2016-2021. Native display ad revenue in the US will rise at a five-year compound annual growth rate (CAGR) of 17% during this time period to eclipse $36 billion. The rise of native video ads, particularly on social platforms, will be one of the main drivers of this growth.
- Social platforms generate most of their revenue from native ads and will continue to dominate overall native ad spending through 2021. The dominance of social platforms like Facebook, Instagram, Twitter, and Snapchat on mobile devices, where the entire experience is within a feed, will help propel social's contribution to overall native ad revenue through 2021.
- Sponsored content, which is categorized separately from native-display due to the direct relationship between publishers and brands in creating the format, will be the fastest-growing native format over the next five years. However, the high cost to produce these ads and the limitation in inventory will limit the format.
In full, the report:
- Forecasts US native ad revenue growth from 2016-2021 through three separate forecasts: native-style display, social, and sponsored content.
- Identifies the major drivers of native ad revenue growth.
- Discusses key players within each category that are contributing to the rise of native.
- Presents some of the challenges of wide-spread native adoption with BuzzFeed as a prime example.
- Lays out future opportunities for native ads, including virtual reality, messaging apps, and TV.
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