Study Forecasts Instagram’s Ad Revenue To Hit $2.8B By 2017

The app’s ad platform has benefited from its close relationship with parent company Facebook, which bought it for $1 billion in 2012.

How big? Big enough to pass Twitter and Google in mobile ad revenue in the next two years. With a less aggressive approach than Facebook, the photo social network has managed to grow an incredibly strong user-base and according to new findings by eMarketer, is expected to bring in $2.81 billion in mobile ad revenue in 2017.

Globally, Instagram‘s ad revenues will make up 5 percent of Facebook’s mobile ad revenues this year, and that share will increase to 14 percent in 2017, the Internet market research firm forecasts. In the U.S., Instagram will make up 28% of the social network’s mobile total. Instagram does not now offer a desktop ad product, therefore all sales numbers are for mobile. Several of the new features are expected to roll out this fall for all advertisers.

The research firm attributes the “rapid growth” to high demand for Instagram’s new ad products, which – coupled with better measurement and targeting features – are expanding beyond branding to include direct response and the ability to buy ads via API. “Now that Instagram is opening up, there’s a lot of pent-up demand”.

“In particular, Instagram advertisers will be able to use a full slate of Facebook targeting tools, including the popular Custom Audiences feature”, Williamson added. “That will be a key drawing card”, said principal analyst Debra Aho Williamson of eMarketer. By 2017, eMarketer projects Google’s revenue will hit $2.38 billion, just a hair below Instagram’s, and Twitter’s to be $2.29 billion. By 2019, over one-third of the country’s population is expected to use the social network, amounting to 111.6 million consumers.

Facebook (NASDAQ:FB)-owned photo-sharing site Instagram saw its mobile user base blow past rival Twitter (NYSE:TWTR) in 2014.

Instagram’s worldwide mobile display ad revenue will follow a similar path, growing from $595 million in 2015 to $1.48 billion next year and $2.81 billion in 2017. Regular re-evaluation of available data means the forecasts reflect the latest business developments, technology trends and economic changes.