Chris "Coz" Costello, Senior Director of Marketing Research @ Kenshoo
What the rapid growth of advertising on Instagram really indicates and what it means for your social ad budget
One of the biggest headlines to come out of Facebook’s Q2 2018 earnings call was that OH MY GOD ALL OF THE USERS AND ALL OF THE AD SPENDING IS GOING TO INSTAGRAM AND THERE’S LITERALLY NO BUDGET GOING TO FACEBOOK ANY MORE!!
At least that’s how it seems when you sample some of the headlines. There have been many, many breathless articles talking about how Facebook advertising is completely dead in the water, because Instagram is eating its lunch. Putting aside that both of these lunches exist at the same table, this sort of headline always triggers my Spidey-sense. Fortunately, Kenshoo has one of the most robust sets of social advertising data in the industry, so I can dig into over $75 million in total monthly Facebook spending to see if there’s any merit to the overarching narrative of a shift in ad spend to Instagram.
There is, of course, a kernel of truth to this storyline. Q2 was relatively flat as far as overall social spending goes when compared to Q1, with Instagram yielding a slight increase while Facebook was down just a hair. And Instagram is incontrovertibly growing at a faster rate year-over-year than the rest of Facebook. But as is often the case, Instagram also has a smaller spending base, which immediately brings to mind my favorite XKCD comic ever:
Reprinted from xkcd.com
To put this into perspective, here is a bubble chart of Q2 spending on Facebook, Instagram and, for good measure, Instagram Stories, which has also been a focal point over the last month.
That gives you a flavor, but how has that changed over time? If we animate the chart over the past 5 quarters, you can see that while Instagram is getting bigger, it’s still roughly the size of Earth compared to Jupiter.
So while it might appear that there is a shift in ad spend to Instagram because the rate of change for Instagram is higher, most of the total growth compared to last year is coming from Facebook. In fact, if you look at the total increase in spending across Facebook and Instagram in Q2, 84% of those incremental dollars came from Facebook, and 16% came from Instagram.
To look at it another way, we can ask: Are there advertisers who are spending a majority of their ad dollars across the Facebook universe on Instagram? To understand this, we need to look at a distribution of advertisers based on their Instagram share. This type of visualization is known as a histogram, which means that what you are about to see is an Insta-histogram.
This may a be a long way to go to get a simple answer, which is that there are very few advertisers with a majority of their overall Facebook spending on Instagram. It’s not quite zero, but it’s close. So the answer to the question “Is there a shift in ad spend to Instagram from Facebook?” is a resounding “Nah.”
None of this takes away from the fact that Instagram is an increasingly important part of the social marketer’s toolkit. It’s just not the dominant force that some might lead you to believe quite yet.
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