Instagram social media platform is reported to have advertising revenue of up to 20 billion US dollars throughout 2019. That figure is higher than YouTube advertising revenue, which only generates 15 billion US dollars throughout the year, or about 10 percent of Google’s overall revenue.
Compiled from The Verge, Wednesday (05/02/2020), Instagram’s advertising revenue contributed more than a quarter of Facebook’s total revenue in 2019. Although Instagram is not the biggest income from Facebook, it can be said that Instagram has a large contribution in terms of revenue.
Unlike YouTube, ads that appear on Instagram can be displayed via Instagram stories, feeds, and explore tabs. With these three ad placement options, it actually makes the team from Instagram continue to look for ways how ads can be displayed among the user content.
In fact it is known that, Instagram is willing to pay content creators for their IGTV platform to make it more attractive so that it can invite advertisers to attract advertisements. On the other hand, CFO Alphabet Inc., Ruth Porat considered that the costs incurred by Instagram to pay content creators on the platform were still lower than the cost of acquiring YouTube content, which spent around 8.5 billion US dollars.
Achieving 1 billion active users also helped Instagram to get many advertisers. With this amount, it is possible to attract the attention of more advertisers who want to reach a greater number of users. Facebook is also known to have increased the frequency of advertisements on Instagram in recent years.
It was considered Facebook can help increase company revenue because it assumes that Facebook Feeds are now experiencing a decline. To note that in 2019, overall Facebook earned 70.7 billion US dollars, almost all of which came from advertising.