Facebook’s $1 billion bet on Instagram is looking more and more like a bargain.
The photo sharing site, which Facebook acquired in 2012, is growing much faster than its parent company in terms of advertising spending and impressions. And it’s becoming an increasingly important part of advertisers’ budgets.
Advertiser spending on Instagram has “grown pretty dramatically quarter to quarter,” said Andy Taylor, associate director of research at Merkle, an industry research group.
Merkle’s latest report, covering the second quarter, tells the story. The flagship Facebook site did OK in that period. The number of ad impressions the social networking giant delivered in the quarter actually fell from the year-prior period. But because Facebook charged more for those impressions, the amount advertisers spent on the platform jumped 40%.
But Instagram performed even better than that. The amount advertisers spent on the platform well more than doubled as impressions tripled. That represented a resurgence from the first quarter, when spending on Instagram grew at a 66% annual clip.
The ratio of impressions and clicks marketers get from Instagram to the ones they get from Facebook is tilting steadily away from the latter. In the second quarter, for example, the number of impressions companies that advertise on both services saw from Instagram was 20% of the number they got from Facebook. That was up from 12% in the first quarter.
With Instagram becoming more important to their marketing plans, advertisers are devoting more of their budgets to the photo-sharing site. In the second quarter, the median advertiser that marketed on both services spent the equivalent of nearly a quarter of what they spent on the main Facebook site on Instagram. That was up from just the equivalent of just 9% of what they spent on Facebook in the first quarter.
And Instagram is paying off for advertisers in another way. The amount of outbound traffic that Instagram delivered to advertisers’ sites more than tripled in the second quarter from the same period a year earlier. Among major social media sites, only YouTube performed better.