How Instagram Is Planning A Billion Dollar Takeover

Photo: Instagram 

Instagram, the popular photo-sharing app owned by Facebook, will generate $600 million in ad sales this year, according to eMarketer’s first report. The research firm also predicted that the social media site will earn $2.81 billion in ad sales by 2017, outselling Google and Twitter when it comes to U.S. display ads.

The site, which recently introduced “shippable grams” with buy buttons, makes up 28 percent of the social network’s mobile total. The United States alone accounts for 92 percent of Instagram’s revenues in the upcoming year, and will only drop to 85 percent in 2017 when eMarketer forecasts higher international activity. Currently, there aren’t any desktop ad products available for Instagram, meaning all these sales numbers are directly tied to mobile.

The app has been benefitting from its close relationship with Facebook, which acquired it for $1 billion back in 2012. “We expect to see rapid growth in Instagram’s ad revenues this year and throughout the forecast period-driven by high demand for the social network’s new ad products, which will expand beyond branding to include direct response, the ability to buy ads via an [applications programming interface], and enhanced measurement and targeting features,” eMarketer said in its report.

With other properties such as WhatsApp and Oculus Rift in the mix, Facebook is able to increase the monetary return from all these businesses. The Mark Zuckerberg-led company is expected to report $4 billion in revenue for the second quarter this week, with ad revenue growing about 15 percent year over year. “Now that Instagram is opening up, there is a lot of pent-up demand. 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,” said principal analyst Debra Aho Williamson of eMarketer.

Instagram’s user base growth is incredible, as it has increased 60 percent to 64 million people this year. eMarketer estimates that more than 110 million people will have Instagram accounts by the end of the decade.

[via AdWeek]

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