Video ads are taking over Instagram
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Have you noticed more video ads when you scroll through your Instagram feed? There's a reason for that.
In the first quarter of 2016, almost 60% of all ad impressions on Instagram came from video ads, which nearly doubled the percentage in Q4 2015, according to a new study by Brand Networks. The study analyzed 3.8 billion Instagram ad impressions between the last six months of 2015 and the first three months of 2016.
Video ads are becoming increasingly appealing to brands and content creators. Cisco estimates cited by Facebook expects mobile video to account for 75% of all mobile data traffic by 2020, so Instagram is taking advantage of this by adjusting its platform to accommodate more video ads.
Instagram started showing view counts on its videos in February in an effort to court advertisers, and it also extended the length of video ads from 30 to 60 seconds in order to help brands migrate their television ads over to Instagram. These moves occurred at the same time as a surge in video ads' share of total ad impressions on Instagram from 43% in January to 59% in February.
Video ads are also a particularly effective way for advertisers to reach millennials. This group (age 18 to 34) is 112% more likely to share online video ads compared to other age groups, according to an Unruly study.
Furthermore, younger people are frequent Instagram users, and the social media platform has consistently ranked near the top of the most important social networks among teens, according to Piper Jaffray.
Therefore, investment in video ads on Instagram offers an opportunity for advertisers to boost the organic reach of their ads and raise brand awareness.
These types of native ads that appear on Instagram are not going away anytime soon.
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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