Instagram ad spend growth trounces Facebook in wake of privacy concerns

Instagram’s year-on-year ad spend grew 177 percent - four times that of Facebook - as its owner failed to live up to Wall Street expectations following its Q2 2018 earnings report.  

Excluding revenue from its hugely popular photo-sharing app, Facebook reported ad spend growth of 42 percent amounting to $13.23bn (£10.13bn) yesterday which, while on paper sounds reasonable, represented its slowest-growing quarter since it went public.

The report saw Facebook’s stock take a 10% plunge, while the company’s own CFO, David Wehner, admitted that data privacy scandals were a significant contributor, that coupled with other “headwinds”, were likely to impact growth in “high-single-digit percentages” for the remainder of the year.

But while the social network failed to meet the steadfast performance that we’ve come to take for granted, Instagram’s boomed in comparison; impressions on the app rose 209 percent and CPMs (average cost per 1000 impressions) decreased by 10 percent, while in comparison, Facebook’s saw a 70 percent increase in CPMs as ad impressions dropped 17 percent.

But while Instagram is siphoning an increasing amount of ad spend from Facebook, on the scale of things, it still amounts to a relatively small portion. Advertising agency Merkle reports that the photo-sharing app accounted for less than a quarter (23 percent) of spend for the average advertiser bidding on both platforms, while generating 20 percent of ad impressions as that of Facebook, and just nine percent as many clicks as the social network within the quarter.

That didn’t stop BTIG analyst, Rich Greenfield, comment that Instagram had become “an absolute monster” in terms of growth and user engagement, with the photo-sharing app now boasting more than a billion users, having been bought by Facebook for just $715m (£544m) in 2012.

With Instagram roundly dodging any of the collateral impact felt by its parent’s platform in the wake of privacy scandals, the proliferation of fake news, and GDPR potentially being the root cause of its loss of some three million users daily in Europe (despite a global increase of 11 percent), it’s likely Facebook will be leaning on Instagram’s growing contributions for the remainder of the year.

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