eMarketer: Instagram’s ad revenues explode

Instagram’s U.S. growth rate is on the decline even as ad spending on the platform is soaring. 

Instagram’s ad revenues continue to grow at high double-digit rates, according to eMarketer. It expects the social media platform to generate $9.45 billion in ad revenues in 2019, and grow 46.6% to $13.86 billion in 2020. 

The explosive growth comes as newly introduced ads in different parts of the Instagram app, such as the “Discover” tab, open up more inventory for advertisers. Shoppable ads are currently in beta on the platform, and eMarketer said it expects the ads will play a major role in future growth.

In 2019, Instagram's U.S. user growth rate will have dropped to single digits — 6.7%— for the first time, down from 10.1% in 2018, according to eMarketer. Starting in 2020, and through the end of 2023, eMarketer now estimates growth will be at 4.5% in 2020, revised down from 5.4%, and in 2021, it will be 3.2% instead of 4.1%. Contributing to Instagram’s overall slower growth is the fact that older age groups are not joining the platform as quickly as anticipated.

eMarketer added that while older users will not be growing as fast, there have been larger-than-expected gains in users ages 25 to 34, at 11.4%. However, it doesn’t anticipate that this group will change substantially in the coming years, as increased competition from a Snapchat resurgence and the rise of TikTok will make it harder for Instagram to maintain high growth.

“Instagram is doing really well — it is the second-most internet-penetrated social media platform in the U.S. behind Facebook, and despite increased pressure from competition, we expect it to maintain its second-place position with a good gap from the rest of the platforms,” said Nazmul Islam, junior forecasting analyst at eMarketer.