Which channels are on your Mount Rushmore of digital advertising?
If you asked 100 people, 99 of them would include Instagram.
From January through June 2022, more than 17.5k companies spent nearly $4.7b on Instagram ads or 39% of total social media spending during that time.
Instagram will always attract ad budgets—rivaled only by Facebook and Google properties—so the spending habits of advertisers should always be top of mind.
Here are 3 Instagram advertising trends you can’t ignore and what they mean about future digital strategies.
Size Doesn’t Matter to SMBs
With more than 1.2b users, Instagram is one of the biggest social media platforms in the world, trailing only Facebook, YouTube and WhatsApp.
That size isn’t scaring SMBs away.
In fact, it’s attracting them.
Through June 2022, 87% of Instagram advertisers spent less than $50k; 50% of those companies spent less than $10k.
While it might be surprising that one of the most mature ad ecosystems is enticing smaller, likely less experienced advertisers, Instagram has made a concerted effort to do just that.
For example, a drop-down menu brings current or would-be advertisers face-to-face with a guide aptly titled “Small Business How-To Guide.”
Other features, like an intuitive ads manager, also cater to these businesses.
Meta, Instagram and Facebook’s parent company, is following suit.
In July, Meta introduced Small Business Studios, a virtual and in-person initiative that includes online training sessions, workshops, creative inspiration and in-person events for smaller businesses.
Although Instagram has successfully carved a niche for itself with these smaller advertisers, ones with bigger budgets aren’t turning away.
Nearly 1.1k advertisers spent more than $500k on Instagram during the first half of 2022, including those for Brainjolt, Pandora Jewelry and Biohaven Pharmaceutical Company.
What’s more, the top 20 companies advertising on Instagram spent more than $772mm.
Long story short, Instagram has advertisers of all shapes and sizes wrapped around its finger.
Omnichannel Strategy is Still
One-time buzzword, now industry gospel, omnichannel campaigns (or cross-channel campaigns) have become a go-to strategy for digital advertising.
With people using more devices than ever on their path to purchase—the average US household now has access to 22 connected devices—it makes sense.
But the downfall of third-party cookies, which many advertisers use to connect the dots between these channels, is making many advertisers nervous. Here’s the breakdown:
Advertisers who only bought ads on Instagram
- 28% of Retail advertisers
- 40% of Services advertisers
- 24% of Media & Entertainment advertisers
- 31% of Finance advertisers
- 48% of Restaurant & Bar advertisers
Advertisers who bought ads on Instagram and other social channels
- 60% of Retail advertisers
- 50% of Services advertisers
- 51% of Media & Entertainment advertisers
- 55% of Finance advertisers
- 45% of Restaurant & Bar advertisers
Given the increasingly connected world, the fact that advertisers are keeping their money inside social’s walls goes against the fundamental digital habits of literally everyone.
There could be a good reason for it, though.
Actually, there could be two.
Actually, there could be two.
- Younger generations are obsessed with social media.
These generations live and breathe social, especially Instagram—about 53% of Instagram’s user base is between the ages of 18 and 34—and rely on it for everything, including purchasing decisions.
Advertisers appear to be seeing the writing on the wall and shifting their dollars to social accordingly.
As these younger generations gain more spending power, their preference for social will influence budget allocation and almost certainly push more dollars to social media.
- The death of third-party cookies.
While Google recently pushed back its plan to sunset them, they are going away, meaning that finding an alternative is top of mind for most advertisers.
Social media platforms, including Instagram, could be one of those alternatives since it powers ad targeting with first-party data; the same goes for every social platform.
Either way, a shift is occurring and omnichannel campaigns could be making way for the cross-social version.
Instagram Is Top Dog—But It Has Some Competition
Right now, Instagram is the cool kid who everyone wants to be friends with.
Small businesses? Check.
Big businesses? Check.
Absolutely massive businesses? Check.
Instagram’s reach and mature ad capabilities rightfully attract the masses.
The same can be said about the types of advertisers it attracts.
While Retail and Services advertisers accounted for 42% of total spending from the top categories (Media & Entertainment, Retail, Apparel, Tech, and Services) through June, the amount that other industry advertisers are spending is nothing to snuff at.
- Apparel advertisers spent $483mm
- Tech advertisers spent $385mm
- Services advertisers spent $320mm
For these advertisers, Instagram could be a “check-the-box” channel.
In other words, it’s too powerful to abandon completely and still generates ROI.
That said, rising ad loads, especially from major brands in Media & Entertainment and Retail as well as the growth of more organic forms of advertising involving influencers and creators, could be pushing some away.
Where are they going?
Of the 19.8k brands advertising on Instagram through June, 1k (5%) invested in retail media, including those promoting the Apple Watch (consumer electronics), Finish (household goods), and Ritz (snacks & desserts).
While these brands combined to spend less than $1mm on Instagram during the first half of the year, they spent more than $27mm on retail media.
For advertisers that align with retail media, not only does it provide an escape from the rising ad loads on Instagram, but it also allows them to get their hands on some of the most powerful audience targeting data.
Sure, Instagram’s first-party data is powerful in its own right, but the purchase-level data offered by retail media networks is unmatched.
For this reason, retail media networks will continue to be a valuable avenue for advertisers —and given the increasing investments from some of the biggest networks, like Walmart and Kroger, advertisers should continue to move their dollars from Instagram.
Follow the Trends & Keep Instagram Central
With billions in ad revenue every year—Instagram’s ad revenue is expected to come close to $40b by 2023—Instagram deserves its designation as one of the biggest digital advertising powerhouses.
Its size, reach and robust ads manager all but demand it. As third-party cookies and other identifiers fall by the wayside, this won’t change.
That said, retail media networks are posing a threat.
As retail media networks advance, ad spending from certain industries will follow, putting unprecedented pressure on Instagram.
The rise of social commerce could help Instagram fend them off, but only time will tell.
Watch for MediaRadar’s upcoming Social Media Trend Report that dives into some interesting trends, different “sweet spots,” ad spend overlap and some year-over-year trends for social media platforms.
For more insights, sign up for MediaRadar’s blog here.
