Instagram User Growth Drops While Ad Revenues Increase
Building an active user count of over 1 billion people in just 10 years, Instagram is often hailed as not only a cultural phenomenon, but a platform that defined and revolutionized social media over the past decade. But you wouldn’t know this based on the platform’s recent stunt in growth at the end of 2019. According to a report from market research company eMarketer, Instagram’s user growth only grew by a mere 6.7 percent in 2019. While this may not sound all that concerning, what makes the data surprising is that the platform’s growth levels have dropped to a single digit percentage for the first time since Instagram was founded in 2010. In comparison, Instagram’s growth in 2018 was reported to be 10.1%, and eMarketer estimates that Instagram will continue to grow even slower than the platform had previously projected. Source: eMarketer “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%,” said the report.
Why This Is Happening
So, why the sudden decline in growth? One of the main factors according to eMarketer is increased competition from platforms like Snapchat and TikTok, along with older age groups’ lack of desire to join Instagram. In fact, the one area where Instagram is experiencing larger than expected gains in the U.S is users that are aged 25 to 34. But even still, this growth is not expected to increase much in the next few years.
What Does This Mean for Advertisers?
Fortunately for advertisers, this likely won’t have much of an impact on ad revenue, as Instagram is still expected to hold onto its position as the second-most used social media platform behind Facebook. “Instagram is doing really well—it is the second-most internet-penetrated social media platform in the US 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 eMarketer. In fact, Instagram’s ad revenues are expected to continue growing at high double-digit rates and increase from $9.45 billion in 2019 to $13.86 billion in 2020. This can be partially attributed to the fact that Instagram has opened up more inventory for advertisers with newly introduced ads in different parts of the app, like the Discover tab. The platform is also currently beta testing shoppable ads, which are expected to play a major role in future growth of ad revenue.