It’s a success story, all right. A legitimate, blockbuster, zero-to-zoom accomplishment.
Instagram advertising is going through the roof — and fast. The company that Facebook purchased for $1 billion in 2012, and which had no ad revenue at all at the start of 2015, is on track to get to the $1 billion ad revenue finish line by the end of the first quarter of 2016.
“Marketing software company Brand Networks, LLC, an advertising partner for the app, has revealed in a report that since Facebook launched its Instagram advertising API mid last year, the number of ads served through its platform displayed in the app has exploded from 50 million ad impressions in August 2015 to 670 million by December,” reports Duncan Riley at Silicon Angle. “It further expects to be serving 1 billion ads a month by the end of the first quarter.”
During the run-up, the costs of ads did fluctuate; the global average cost per thousand impressions (CPMs) jumped from $5.21 in September to $7.20 in November, arriving at $5.94 in December.
“What was paid depended very much on what product was being advertised, with consumer packaged goods (CPG) averaging $4.92 during the holiday shopping season versus fashion at $16.93 for 1,000 impressions,” noted Riley.
The presence of video ads is no surprise. They accounted for 22.52 percent of ads served in December, up from 9.54 percent in September, coming in at a cost per engagement (people who actually watched some or all of the ad) of $1.40 in fashion and $3.91 with CPG.
“We anticipated that pent-up demand for programmatic, native advertising solutions on Instagram would drive rapid adoption and eventually scale. However, the pace and scale of investment from our clients in key verticals exceeded our expectations dramatically,” Brand Networks Founder and Chief Executive Jamie Tedford said about the numbers. “This year, we expect brands from a wider variety of industries to invest heavily on the platform and experiment with a variety of ad formats — especially video — to stand out in the Instagram feed and reach valuable audiences.”