Instagram mobile ad revenue to rise to $2.81bn by 2017

According to new analysis of Nielsen Brand Effect data, consumers on Instagram are reportedly presenting ad-recall rates of 18 points, which is 2.8 times higher than Nielsen norms for online advertising, it was announced last week. This rise in ad-recall rates can be explained by Instagram's recent decision to start leveraging Facebook’s ad infrastructure and testing new ad formats from website clicks to mobile app installs, including allowing brands to serve video ads of up to 30 seconds in length - all of which aims to provide online advertisers with more sophisticated options for ad targeting in an effort to boost revenue. EMarketer forecasts that by 2017 Instagram's global mobile ad revenues will reach $2.81bn, or approximately 10% of Facebook's global ad revenues, which could mean that Instagram will then have higher net mobile display ad revenues than both Google and Twitter.

For better or worse, consumers seem to be remembering the ads they encounter on Instagram at a remarkable rate. In fact, according to fresh analysis of Nielsen Brand Effect data, the social network is seeing average ad-recall rates of 18 points -- 2.8 times higher than Nielsen norms for online advertising.

The numbers were gleaned from around 700 of Instagram’s more popular ad campaigns from September to November of this year.

Among other happy brands, Sony Pictures was recently able to reach 23% more people in its target segment -- those who might have an interest in the new thriller "The Perfect Guy" -- by adding Instagram to the existing Facebook placements.

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Considering its mostly African-American cast, Sony targeted the African-American affinity segment on Instagram.

Sony Pictures’ creative team also produced a video cut specifically for the Instagram platform in the square aspect ratio, and is now considering using this type of creative on both Facebook and Instagram in order to improve the ease of executing across both platforms.

Instagram only recently began offering more sophisticated targeting capabilities to advertisers. This summer, its ad technology finally started leveraging Facebook’s ads infrastructure -- something brands had long asked for.

The network is also testing new ad formats that achieve difference objectives, from Web site clicks to mobile app installs. Most notably, Instagram recently began letting brands serve video ads of up to 30 seconds in length.

As such, Instagram is assuming an ever larger share of Facebook’s total ad revenue. The network’s global mobile ad revenues will reach $2.81 billion -- or about 10% of Facebook's global ad revenues -- by 2017, according to a recent eMarketer forecast.

If accurate, Instagram will then have higher net mobile display ad revenues than both Google and Twitter. This year alone, Instagram will rack up $595 million in mobile ad revenue around the globe, eMarketer expects.

Marketers clearly appreciate the offerings. This year, 32.3% of U.S. companies with 100 employees or more will use Instagram for marketing activities, according to recent findings from eMarketer.

That number will jump to 48.8% in 2016, and, by 2017, increase to 70.7% of U.S. companies, eMarketer predicts. Instagram will then overtake Twitter for the first time in terms of popularity among marketers, if the forecast holds out.