Instagram to contribute to Facebook’s advertising revenue growth
Facebook’s (FB) photo and video sharing platform, Instagram, is rapidly growing and has an active advertiser base of around 2 million, which doubled in just five months. In fact, according to one Wall Street analyst, Instagram is likely to contribute a significant chunk to Facebook’s advertising revenue, which relies mostly on advertising growth. According to Andy Hargreaves of KeyBanc Capital Markets, Instagram could push the company’s advertising revenues to $8.9 billion in 2018. Hargreaves said Instagram is expected to bring around $22 billion in ad sales in 2020 and would make up 26% of Facebook’s total ad revenue by 2020.
Instagram users are growing, while Facebook popularity is slowing
Instagram is rapidly growing and gaining popularity among the younger generation and teens. Instagram hit 800 million monthly active users (or MAU) in September and is likely to touch 900 million MAUs any day based on its growth trajectory. According to Hargreaves, Instagram will likely cross the 1 billion MAU mark in the late half of 2018. Further, the analyst believes that Instagram MAUs could reach 1.4 billion by 2020.
Facebook, on the other hand, currently has 2.2 billion monthly users. However, Facebook growth is maturing, and the platform is losing popularity among teenagers. Users between 13 and 17 have been switching to Google’s (GOOGL) YouTube and Snapchat (SNAP), according to a study by the Pew Research Center.
Snap is gaining popularity among teens
According to a recent report by eMarketer, 68.0% of Internet users between 12 and 17 years old will use the Snapchat platform by the end of 2018, which is higher than the expected rates for Facebook and Instagram at 47.2% and 43.6%, respectively.