instagram-ad-spend- 2016

Social Media advertising is growing at a tremendous rate as brands have been spending more fortunes on digital ads with each passing year. In few of the developed markets, such as US, Digital ad spends is expected to surpass the TV Ad spends by the end of 2016, led by social media advertising with 21.3% share of the total amount. With the exploded adoption of Smartphone and Mobile Internet, the connected users are spending more time on social media, and this has led brands to allocate more budget for social media ad spend.

A recently released report from 4C, a company specialising in social advertising software, highlights the growth of paid social media advertising, especially in Facebook, Instagram, Twitter, LinkedIn, and Pinterest for the fourth quarter of 2016. According to this report, the paid social media advertising on a whole saw an unprecedented 65% YoY and 43% QoQ growth. This is very first time when three social media networks, Instagram, LinkedIn and Pinterest have registered a triple-digit growth in a quarter.

Twitter is Still Losing!

Looks like brands are not failing to find the desired ROI from Twitter advertising. Twitter, owing to the rumoured financial troubles since October, managed to grow only by 24% QoQ and 13% YoY in terms of ad spendings by brands. But this growth is still the least of all the social media platforms. Twitter has seen low active user count and a slower user growth in the past few years. This could be a major reason for brands not to put their faith on this platform.

Pinterest Creates Interest

Pinterest, at the third position, has seen a spectacular triple digit 109% YoY growth on the money spent on advertising and a QoQ growth of 33%. According to the 4C report, Pinterest has nearly 150 million users. Despite this low number, Pinterest has more brands investing on advertising than Twitter. Brands, especially those who fall under Retail and Consumer Packaged Goods, seem to prefer Pinterest. There are more than 10,000 brands and 60 million buyable pins on Pinterest. The fact that 93% of Pinners that use Pinterest to plan a purchase can conclude as to why Pinterest is a target for hardcore advertising. Though the stats are bit old but it don’t fail to surprise as 87% of people purchase something because of Pinterest.

B2B Marketer’s hero, LinkedIn

At the second position, LinkedIn was leading in the fourth quarter of 2016, with a YoY growth of 130% and QoQ growth of 50% in ad spend. LinkedIn’s ad spend is mostly through B2B marketing. Statistics show that 94% of B2B marketers use LinkedIn for their growth. And 87% of these marketers find LinkedIn the most effective. Further, as of October, LinkedIn had nearly 10 billion endorsements on its platform. And to conclude, it’s acquisition by Microsoft is an icing on the cake. This acquisition will ensure better advertising revenue for LinkedIn in 2017.

Instagram takes the Lead, surpassing Parent Company Facebook!

Though Facebook continues to dominate the social media ad market, it is Instagram that has seen the highest growth. Facebook ad spend increased by 74% from the previous year, while Instagram grew by nearly double at 138%! Considering their quarterly growths, Instagram still beat its parent company, going 57% against 52%.

It is isn’t that surprising to see that Instagram has seen such a tremendous growth in terms of advertising on its platform. Instagram’s ad platform was launched after Facebook acquired it. Since Facebook leads the social media advertising platforms, it was bound to reflect in its subsidiary.

Why Are Brands Hooked With Instagram

It’s clearly evident that Facebook-owned mobile-only social network Instagram has recorded an unprecedented growth, beating all other social networks in terms of growth in ad spends in Q4 2016. Brands and advertisers are betting big on Instagram in anticipation of greater ROI.

It’s is interesting to dig deep into the growth of Instagram to find out why advertisers are so bullish about the ad spends on Instagram – more than Facebook.

  • Instagram’s user count touched 600 million, 100 million of which started using the platform only in the last six months.
  • Instagram allows pictures and videos to be posted only through mobile. Courtesy the increased smartphone usage, Instagram’s popularity is totally justified.
  • The brands on Instagram have a per-follower engagement rate of 4.21%, 58 times higher than Facebook and 120 times higher than Twitter.
  • Business Profiles, launched by Instagram five months ago, provides businesses with tips on how to create a business profile, how to use insights, and how to promote posts.
  • Instagram doubled its advertiser count in six months, touching 500,000 advertisers.
  • Stories, launched by Instagram and apparently “inspired” by Snapchat, has now hit 150 million users. 
  • Instagram just launched skippable ads on its Instagram stories. These videos will appear between people’s stories and can be skipped.

Why Instagram Surpassed Facebook?

Despite a 74% YoY growth, Facebook ad spend seems to be slowing down. It continues to be the most highly trusted social media platform, with 67% of marketers planning on increasing their Facebook marketing activities. However, Facebook has reached a sort of stagnation point. Around 40% of marketers are unsure if Facebook traffic has seen a decline. 35% of them don’t consider Facebook marketing as effective anymore. Facebook also offers free marketing through organic posts and pages. There are nearly 60 million small business pages, but only 4 million active advertisers pay for Facebook ads.

Facebook also offers free marketing through organic posts and pages. There are nearly 60 million small business pages, but only 4 million active advertisers pay for Facebook ads.

However, Instagram surpassing Facebook shouldn’t make much of a difference to the social media giant, as Instagram is its own subsidiary. The profits keep ringing in for Zuckerberg, whether through Facebook or Instagram!

Lastly, the report mentions about Snap ads from Snapchat. The snap ads were only getting tested in the Q4 2016. This social media platform is also on a growth trajectory. As of now, only 5% of marketers are on Snapchat, unpaid. But, with the launch of Snap Ads, this may change.