Instagram isn’t the biggest moneymaker for Facebook, but it certainly plays a major role in generating revenue for the social media company. Bloomberg reports today that the app brought in $20 billion in advertising revenue last year, which accounts for more than a quarter of Facebook’s overall 2019 revenue.
Ads show up on Instagram in between Stories, within the feed, and on the Explore tab. The Instagram team has increasingly figured out how to wedge ads between users’ content.
This sales figure is particularly interesting in light of Google’s admission yesterday that YouTube generated $15 billion in ad revenue last year, or about 10 percent of Google’s overall revenue. Unlike YouTube, Instagram doesn’t share any of its ad revenue with creators. The Verge previously reported, however, that Instagram does pay certain creators for their IGTV content, although in that case, the company pays for creators’ equipment and shoots rather than sharing ad profit. These costs typically didn’t reach even the five-figure range, Instagram said. YouTube, on the other hand, shares ad revenue with creators, and Alphabet CFO Ruth Porat told investors yesterday that creator costs go under YouTube’s “content acquisition” costs, which run around $8.5 billion.
Facebook has focused on monetizing Instagram. It’s built a shopping product that gives brands the ability to sell items directly from the app and is also setting itself up to play a larger role in influencers’ content deals. It recently gave some creators access to a Facebook product designed to help coordinate brand deals, and presumably, the company will continue to expand its tools for creators and give brands access to metrics, likely to generate more money for the company.