In 2015, Instagram only contributed 7% of Meta’s total U.S. revenue, according to Emarketer. Ten years later, the application should represent half of it, according to the latest forecasts from the research firm.
Instagram is expected to generate $32.03 billion in ad revenue in the United States next year, an increase of 24.4% from 2024, according to Emarketer. The increase would bring Instagram’s share of Meta’s U.S. ad revenue to 50.3%, marking the first time it has accounted for more than half of the company’s overall ad revenue.
One of the driving forces behind Instagram’s success is its ability to generate more revenue per user compared to other social media platforms. According to Emarketer, since 2019, Instagram has surpassed Facebook in average revenue per user: currently, Instagram earns $223 per US user, while Facebook generates $191. TikTok ranks third, at $109 per user, according to Emarketer’s report.
“While other social platforms flood their services with more ad placements, Meta is working to make its ads more effective, primarily through AI,” said Jasmine Enberg, principal analyst at Emarketer.
Enberg added that Reels, Instagram’s short-form video product, has been “a major driver of Instagram’s growth” as social media content becomes increasingly video-focused.
“Instagram is now a video-first platform, with users spending almost two-thirds of their time on Instagram watching videos,” she said.
As Reel becomes more popular with users and advertisers, Instagram’s growth drivers are evolving. In 2024, Feed accounted for 53.7% of total ad revenue, while Stories contributed 24.6%. However, both of these shares decrease as Reel revenue increases.
According to Emarketer, since 2015, Instagram’s user base in the United States has increased by 142%, from 61.49 million to 148.73 million.
Benefits of a TikTok ban
As the ad industry prepares for a potential ban on TikTok in January, Instagram is preparing for a significant increase in its ad spending.
Enberg said that if a ban on TikTok were enforced, Instagram could capture more than a fifth of the $12.34 billion in ad spending previously allocated to the platform.
Instagram is well aware of this opportunity; Enberg highlighted the app’s efforts to recruit TikTok creators since the platform was threatened with a ban.
Instagram also introduced new features, including allowing users to test the coils by sharing them with a small group of non-subscribers and introducing an update that helps small accounts be discovered more easily. In 2025, the platform should continue to position itself as a haven for creators looking for an alternative to TikTok.
As the social media landscape continues to evolve, so do Meta’s growth drivers. By 2025, revenue from Instagram’s Explore, Reels and a potential new ad offering from Threads are expected to account for a total of 9.6% of the company’s overall revenue, while Feed and Stories will decline to 73.8%. % collectively.
Enberg said that while it’s likely Meta will roll out ads in Threads starting in 2025, the process will be slow. “Threads is unlikely to be a major contributor to Meta’s ad revenue in 2025,” she said.
