Reports: Instagram advertisers stay loyal, keep spending more

Source: Kenshoo Q4 2018 Quarterly Trends Digital Marketing Report

Instagram’s ad business had a stellar year in 2018, according to reports out this month. Kenshoo’s recent digital marketing report showed the Facebook-owned app saw 120 percent increase in ad spend year-over-year during the fourth quarter of 2018, and was up 43 percent over third-quarter results.

“For every dollar spent on Instagram by a new advertiser in 2018, existing advertisers increased spending by $4.00,” says Chris Costello, the senior director of marketing research for Kenshoo, a digital ad platform, “The majority of Instagram spending growth to date has come from advertisers who have been on the Instagram for at least five quarters.”

Existing advertisers are driving Instagram’s growth. Kenshoo told Marketing Land the increased ad spend growth on Instagram during 2018 was predominantly from incremental spend lifts from advertisers already on the platform. The company’s data showed 82 percent of year-over-year Instagram spending growth during the fourth quarter of 2018 came from existing advertisers, and 97 percent of the growth between the third and fourth quarters was from existing advertisers.

Based on data from more than 3,000 advertiser and agency accounts across 20 vertical industries and over 60 countries, Kenshoo’s findings are not isolated. Jeremy Brown, CMO and founder of digital marketing agency Metric Theory, said that among his clients running Instagram campaigns, approximately a third of accounts are new to Instagram (but previously on Facebook).

“In general, we are seeing more inventory available on Instagram — Stories being a big part of that. We are also seeing more interested from a variety of clients and especially clients in the fashion, beauty, health, travel and food sectors where Instagram is a great platform to reach younger audiences,” says Brown.

According to Brown, the majority of ad spend growth his agency saw on Instagram last year was primarily driven by existing Instagram advertisers who were already running campaigns on the platform.

“Advertisers are not suddenly waking up to Instagram as an advertising platform,” says Kenshoo’s Costello, “They’ve been there all along. Instagram advertisers are increasing spend incrementally as they begin to boost the value of existing programs by reaching target audiences who may be spending more time on Instagram and then converting those audiences.”

Instagram Stories ad spend accelerates. Kenshoo found ad spend on Instagram Stories grew faster than Instagram News feed ads — with Stories ad spend share going from eight percent in the third quarter of 2018 to 10 percent during the fourth quarter.

“By turning their creative elements, capitalizing on the growth of Instagram Stories and implementing new features when released, advertisers are continuing to see returns that justify increased investment across the Facebook ecosystem,” says Costello.

In its quarterly digital advertising report, performance agency Merkle also showed significant Instagram ad spend growth among its client set. Advertisers on Instagram increased spending 138 percent year-over-year during the fourth quarter. The company expects advertisers will continue to invest in Stories ads unit throughout 2019.

Source: Merkle Q4 2018 Digital Marketing Report

The Instagram-Facebook ad split. While Instagram advertising is growing faster, Facebook still owns the biggest share of ad dollars.

“Brands that advertise on Facebook and Instagram rarely spend more than 50 to 60 percent of their total budget on Instagram. So, as fast as Instagram is growing, Facebook still dominates the share of wallet,” says Kenshoo in its report.

Merkle found Instagram accounted for more than one-fourth (27 percent) of spend on Facebook during the fourth quarter of 2018, pointing out that nearly all Instagram advertisers are on Facebook, while the reverse (Facebook advertisers on Instagram) is not yet true.

“Today we see Instagram tends to drive more efficient costs per action, and thrives for time-spent-by-user; while Facebook, not withstanding its scale, still delivers similar, if not higher, click-through-rates,” says Merkle’s associate director of social media Graeme Jamieson.

Client’s take: It’s all the same marketing budget. “Most [advertisers] view their Instagram and Facebook budget as the same pool of media spend, not separate,” said Ryan Kelly, VP of marketing for the digital ad platform Nanigans. “So when they increase spend on the channel, they’re not necessarily dictating ‘X-percent’ should go to Instagram. Instead, when advertisers run their campaigns, they’re utilizing Facebook’s automatic placement of their ads between the two inventory resources.”

Jamieson echoed Kelly’s comments, noting that Instagram is still part of Facebook and each serves advertiser objectives.

“Let’s not forget, Instagram is an extension of Facebook, not a replacement, given that its outstanding attribute for marketers is we know it is the same user, and we know where and what to serve. As such, there is a role for each in well-rounded marketing plans, when users come first and spend is optimized towards top performing tactics,” said Jamieson.

Marketers care most about return on ad spend.

“As long as their targets are being met, they will continue investing in the channel regardless of where the actual ad is shown.”

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About The Author

Amy Gesenhues is Third Door Media’s General Assignment Reporter, covering the latest news and updates for Marketing Land and Search Engine Land. From 2009 to 2012, she was an award-winning syndicated columnist for a number of daily newspapers from New York to Texas. With more than ten years of marketing management experience, she has contributed to a variety of traditional and online publications, including MarketingProfs.com, SoftwareCEO.com, and Sales and Marketing Management Magazine. Read more of Amy’s articles.

This marketing news is not the copyright of Scott.Services – please click here to see the original source of this article. Author: Amy Gesenhues

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