uploads///Instagrams Share of Facebooks Net Mobile Advertisng Revenue

How Facebook Is Monetizing Instagram

By

Updated

Facebook’s Instagram has 200,000 advertisers

Facebook’s (FB) Instagram business has made rapid strides since its acquisition. With more than 400 million monthly active users (or MAU), Instagram now has 200,000 advertisers. Although it’s a small number compared to Facebook’s 3 million active advertisers, its rapid rise seems to be ringing alarm bells for rivals like Google (GOOG), Twitter (TWTR), and LinkedIn (LNKD).

Facebook has not yet revealed the actual earnings of Instagram. However, according to a report from eMarketer, Instagram accounted for 5% of the net mobile ad revenues of Facebook in 2015. The report also mentions that Instagram will account for 9.5% of Facebook’s total mobile ad revenues this year, which will grow to 14% by 2017, as the chart below shows.

Article continues below advertisement

Why Instagram is a good place to advertise

Instagram has surpassed the 400 million user mark, and the majority of its users are young and high-income teens. This is exactly the type of audience big brands are after, so it’s a complete win-win situation for both marketers and advertisers.

Facebook has worked to improve Instagram’s ad targeting and relevance. The company expanded new ad formats for Instagram to include self-serve ad capabilities for marketers. Instagram ads are now available in all the countries where Facebook ads are present. Advertisers can target users on Instagram according to preference pattern, gender, age, and country. Initially, Facebook had posted restrictions on the content being marketed on Instagram, and this made Instagram unique on social media.

To get portfolio exposure to Facebook, you can consider investing in the Technology Select Sector SPDR ETF (XLK). This ETF invests 6.7% of its holdings in Facebook.

Advertisement

More From Market Realist