By the end of the year, over 25 billion dollars will be spent on social network advertising across the globe. With advertisers spending 600 million dollars on Instagram advertising during the brief amount of time it has been open for business. Instagram ad revenues are predicted to dramatically increase year-over-year, and will pull in more revenue than other leading mobile ad platforms by 2017.
So why are marketers and advertisers spending more of their ad budgets on Instagram?
Instagram User Growth
Earlier this month, Instagram hit 400 million users with half of them using the site daily. The amount of active users alone is one reason to increase ad spend on this social network. However, brands are most likely shifting their ad strategy to Instagram because their target audience is flocking to the app. According to Pew Research Center, 56% of online adults ages 18-29 use Instagram. These statistics show an upward growth in the amount of ad revenue because the number of consumers you will be able to reach is rapidly increasing.
Today, you can’t walk down the street and exchange a smile, nod or wave easily. This is because the majority of people are staring down while they go about their daily lives. But what are they staring at? Mobile devices.
Last year, close to half a billion mobile devices or mobile connections were activated worldwide. Mobile devices are not just a business necessity or luxury item, it is a way of life. 46% of smartphone owners say they couldn’t live without their device. To understand the increase of mobile usage we need to take a closer look at millennials. By studying their mobile behaviors you can get a glimpse into what the future holds.
- 87% of millennials always have their smartphone at their side at all times (CMO Council)
- 78% of millennials spend over 2 hours per day using their smartphone (CMO Council)
- 91% of millennials purchase on mobile monthly (Social Lens Research)
- 35% of millennials would like to purchase more on mobile but it’s too hard to do so (Social Lens Research)
- Millennials in the U.S. spend an average of 7 hours a month on Instagram (Statista)
As you can see, mobile usage is a way of life for generations born into the technology era. Marketers and advertisers will need to adapt to the mobile shift so they can reach their audience.
Increased Ad Blocking
There is numerous positives to consumers becoming more socially savvy. However, there is one major hurdle that marketers and advertisers need to overcome – ad blocking. Consumers are tired of being bombarded by ads almost everywhere they go, and they are taking action.
Ad blocking usage in the United States grew by over 48% during 2015. So, how is ad blocking affecting brands? Adobe estimated that this year alone, 21.8 billion dollars of revenue will be lost due to ad blocking globally. Marketers and advertisers can’t afford to leave this much money on the table, so they are turning to other digital platforms such as Instagram to spread their message.
Achieving Results Through Instagram Ads
Monetizing posts is a very realistic possibility with Instagram ads. Brands and advertisers that have been able to advertise on Instagram are starting to see the positive results from their efforts. Now that they have proven Instagram ads drive revenue they and focusing on structuring strategies to influence more revenue with each campaign. Therefore, advertising revenue generated by Instagram will reach a whopping $1.48 billion in 2016 (eMarketer) as marketers look to spend more to get a greater return.
The more data and tracking you have in place, the better you’ll be able to produce results. The key to advertising on Instagram is to stick to the fundamental principles of the social media network. Marketers and advertisers should create compelling ads that are not overly promotional, and blend in with the user generated content (UGC) consumers are used to seeing on Instagram. Consistent, high quality, authentic images are effectively increasing brand awareness and revenue.
The Rise of User Generated Content (UGC) and Social Influencer Marketing
The growth of social influencer marketing has given brands and advertisers access to UGC that can be repurposed in their advertisements. The benefits of using UGC in your Instagram ads are worth the time and effort to identify the most engaging content from the best social influencers.
Brands should focus on collecting authentic UGC for many reasons. One of the most important reasons brands should use UGC is because it is more trusted than brand content. UGC influences consumers to buy because they receive validation from other customers that the product provides value. When marketers reveal the authentic side of their brand it builds brand trust and loyalty with consumers.
Getting permission from social influencers to use their UGC is a budget-friendly way to get creative for your ads. The great thing about UGC is that there is fresh new content being created by thousands of people daily.
It’s without a doubt that Instagram is going to play a major role in digital advertising for years to come. Brands already advertising on Instagram have experienced an increase in brand awareness and revenue. Brands and advertisers should prepare their advertising budget for 2016 to include Instagram.