Instagram advertising is going gangbusters, according to new data

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Advertising on the Facebook-owned photo sharing app Instagram is going gangbusters, according to new data.

Marketing software company Brand Networks, LLC, an advertising partner for the app, has revealed in a report (pdf) that since Facebook launched its Instagram advertising API mid last year, the number of ads served through its platform displayed in the app has exploded from 50 million ad impressions in August 2015 to 670 million by December.

It further expects to be serving 1 billion ads a month by the end of the first quarter.

The price of advertising has fluctuated somewhat, with the global average cost per thousand impressions (CPMs) jumping from $5.21 in September to $7.20 in November, before settling at $5.94 in December.

What was paid depended very much on what product was being advertised, with consumer packaged goods averaging $4.92 during the holiday shopping season versus fashion at $16.93 for 1,000 impressions.

Video ads accounted for 22.52 percent of ads served in December, up from 9.54 percent in September, coming in at a cost per engagement (that is people watching the ad) of $1.40 in fashion and $3.91 with consumer packaged goods.

“We anticipated that pent-up demand for programmatic, native advertising solutions on Instagram would drive rapid adoption and eventually scale. However, the pace and scale of investment from our clients in key verticals exceeded our expectations dramatically,” Brand Networks Founder and Chief Executive Jamie Tedford said about the numbers. “This year, we expect brands from a wider variety of industries to invest heavily on the platform and experiment with a variety of ad formats — especially video — to stand out in the Instagram feed and reach valuable audiences.”

Bottom line

No one knows quite for sure exactly what Instagram’s growing business means for Facebook’s bottom line, as previously the company has not broken out numbers for the app, although according to Forbes, Facebook watchers are hoping this may change when the social networking giant delivers its Q4 financials tomorrow.

The lack of numbers has never stopped people making an educated guess, however, and Credit Suisse believes the business will contribute $730 million in revenue in the quarter and that it is seeing 25 percent quarterly growth, resulting in it likely bringing in around $3.2 billion in revenue this year.

Whatever the figure is, it’s quite remarkable for an application that at the beginning of 2015 had no revenue at all, despite being acquired by Facebook back in April 2012 for $1 billion.

Instagram’s rapid increase in advertising could also see it valued, be it as a division of Facebook, perhaps as high as in the low hundred billions as well, up from an estimated value of $35 billion as of December 2014.

If you want to know how Instagram manages its rapid growth, check out SiliconANGLE’s theCUBE’s interview with Instagram Engineering Manager Rodrigo Schmidt at the @Scale 2015 conference in San Jose here.

Image credit: amira_a/Flickr/CC by 2.0