Facebook Inc plans to make the most of its user base of over 1.2 billion and they have unveiled a number of new features which it plans to use on its platform. The world’s largest social network also seeks to branch out into other areas and compete more directly with rival platforms. Facebook is working to build its Instagram network, and is reported to have its sights set on outdoing YouTube.
The popularity of Facebook’s Instagram platform is growing rapidly. The photo blogging tool appeals well to both users and investors. The latter hold a keen interest in the monetary aspect of Instagram. It is not only rife with imagery of every kind, but also makes a trend of this without being overbearing. It is this attribute which makes Instagram ideal for advertising. It holds a promotional value that is unlike its rivals.
Facebook’s Instagram Holds Untapped Potential
Despite this, the photo blogging tool’s ability to bring in tons of capital has mostly been left unattended. Which begs the question: Why not capitalize on Instagram’s untapped revenue potential?
Three years ago, Facebook funded Instragram with $1 billion. It has slowly been grooming the app ever since. This past summer saw Instagram slowly tread in deeper into its revenue potential. But analysts and investors expect much more.
“Turns out, based on some new data, even the sky-high expectations of what Instagram will contribute to the top line may prove conservative,” said The Montley Fool’s Tim Brugger.
According to reports, Facebook’s COO Sheryl Sandberg suggested it should be a while before investors can reap the benefits of Instagram’s revenue income. As the world’s largest social network approaches its November 3Q earnings call, it is likely that instagram will not have contributed much to the firm’s total earnings.
Analyst predict Instagram will have contributed around $700 million at end of the 2015 financial year. However, based on its increase in monthly average users, the app should be responsible for about $6 billion in yearly income by 2020.
Instagram Closes In On YouTube
A U.S. survey revealed that 72 percent of marketing experts placed Instagram as the visual social platform mostly likely to draw in the biggest ad revenue in coming years. It was followed the up-and-coming Pinterest. Investors and advertisers are head over heels about Instagram’s capacity to draw in money. The photo blogging app is even expected to outdo YouTube in a few years.
Currently at the top spot, YouTube dominates the video ad sphere. This is in regards to social networks, of course. The actual top spot still belongs to television. This could soon change, though, but let us not digress.
Alphabet’s YouTube is expected to draw in an estimated $1.88 billion in revenue next year. Facebook’s Instagram in comparison should more than double from this year’s estimated $700 million to $1.5 billion in 2016. This places it hot on the heels of YouTube.
But Instagram is not the only reason why Facebook stands to dominate the realm of video ads. Facebook reported that mobile ads shot up by 220 percent last quarter. This came after the firm began heavily backing video ads. Both Facebook and Instagram hold a monthly average user base that in on the rise as well. Facebook is also working on incorporating virtual reality onto its platform and is placing a lot of effort into promoting 3D videos.
It is no wonder why many analysts predict the world’s largest social network could soon easily take the top spot in regards to video ad revenue.