Facebook Inc’s Instagram is bringing more than 30 advertisers
into one of its fastest-growing features, Instagram Stories, in a
bid to boost advertising revenue, the company said on Wednesday.
The social media company will become a more important player in
maintaining Facebook’s growth in advertising revenue in 2017.
During the last two earnings calls, Facebook executives said they
may soon reach a limit on the amount of ads they can place before
users, one of the factors that had driven ad revenue growth.
Instagram is expected to generate $3.64 billion in worldwide ad
revenue this year, nearly double that of 2016, according to
eMarketer. That would represent 12.3 percent of Facebook’s
global ad business, up from 8.4 percent in 2016. In the United
States, eMarketer said it expects Instagram to account for more
than 20 percent of Facebook’s ad revenue.
eMarketer also found that 74 percent of U.S. companies plan to
use Instagram this year, up from 53 percent in 2016. This level
of use would allow Instagram to surpass Twitter.
Media buyers are optimistic about Instagram’s ability to maintain
Facebook’s place, second only to Alphabet Inc’s Google, in the
Facebook’s place, second only to Alphabet Inc’s Google, in the
digital ad marketplace. “Instagram could end up being as strong
a revenue component for Facebook as YouTube has been for
Google,” said Noah Mallin, head of social for ad agency MEC
Wavemaker.
Wavemaker.
In Instagram Stories, users and businesses can post a string of
photos and videos that disappear after 24 hours. It launched in
August and now has 150 million daily active users, according to
Jim Squires, director of market operations for Instagram.
The new ad product will show full-screen ads intermittently as
users swipe through photos and videos on Instagram Stories.
The company
The company
is testing it with major advertisers including General
Motors Co, Nike Inc and Airbnb, which is using it to promote
its product Trips on Airbnb.
Time Warner Inc’s Turner Sports will test ads for cable network
TNT’s airing of the National Basketball Association’s All-Star
Game in New Orleans next month.
Companies normally test new advertising products with a select
group of advertisers before a wider roll out.
“It’s definitely gained importance,” said Ian Schafer, founder and
chairman of ad agency Deep Focus, who said he plans to spend
more money with Instagram.
The past few months have seen Facebook admit to a variety of
errors in how it has measured performance for brands that advertise
on the platform. Buyers do not expect that to hurt Instagram’s
efforts.
“They just have such a monopoly when it comes to attention
that it’s difficult not to have to go that route,” said Victor Piñeiro,
senior vice president social media for digital agency Big Spaceship.
– Reuters
