Newer Ad Players Instagram and Amazon Continue to Register Gains

August 23, 2019

This article is included in these additional categories:

Advertising Trends | Creative & Formats | Digital | Display & Rich Media | Paid Search | Social Media | Spending & Spenders | Video

Facebook’s investment in Instagram continues to pay off and appears to making up for the slow down in Zuckerberg’s original social network. In Q2 2019, brands advertising across both platforms spent 35% as much on Instagram as they did on Facebook, per the latest quarterly update [download page] from Merkle that analyzes client activity.

This figure means that for brands advertising across both platforms, around one-quarter (26%) of their Facebook property ad budget is going to the “photo app” that was acquired for $1 billion in 2012. While it’s worth noting that not all advertisers spend on both platforms together, ad spend figures from Q1 2019 estimated that 1 in 5 ad dollars received by Facebook’s properties came from Instagram.

In percentage terms, this newer social network is growing at a far faster rate than its parent. While year-over-year (y-o-y) spend grew by 8% on Facebook itself in the second quarter of this year, Instagram saw more than 10x the percentage growth at 85%. The percentage growth in impressions was of a similar scale of difference, with Facebook growing by 25% versus Instagram’s 208%. CPMs fell for both Facebook (down 13%) and Instagram (down 40%), making individual impressions cheaper overall.

Among other factors, Instagram has been buoyed by the growth of the Stories format, with the majority of marketers listing Stories as effective in their social media strategies. Social media users also seem to appreciate Stories, with a Facebook IQ survey of Instagram users reporting that one-third had become more interested in a brand or product after seeing it on Instagram Stories.

Meanwhile, the original Facebook network has seen falling interest from youth. Facebook also ranks low in terms of user satisfaction among social networks generally, as users experience a sense of discomfort from activities such as interest categorization.

These factors may also be contributing to falling performance in two of Facebook’s ad formats – the newsfeed and the right-hand rail. For Q2 2019, y-o-y CTRs fell by 26% and 22% respectively.

YouTube Sees Its Own Growth

One veteran social network that seems to be doing better than Facebook is YouTube, which saw advertisers increase y-o-y spend by 43% in Q2 2019. The authors for Merkle’s report cite bad press around brand safety as a historical dampening factor, but one which may have led advertisers to target ads more carefully.

YouTube likely benefits from the fact that video helps drive sales, with separate research from Brightcove showing that some three-quarters of adults claim to have made a purchase after viewing a marketing video.

Amazon Sponsored Products Ads Drive Double The Sales

On the first view of Merkle’s data, growth in Amazon’s ad formats seems to be quite muted, with y-o-y spend growth of just 12% in Sponsored Products and a 2% fall in spend on Sponsored Brands for Q2 2019.

However, the growth in performance is a completely different situation. Sponsored Products saw a 58% rise in clicks and a 102% lift in sales, with Sponsored Brands seeing 28% more clicks and 53% more sales.

The report also shows that Amazon’s ads far outperform Google Shopping when it comes to conversion rate, being 2.4x higher for Sponsored Products and 1.7x higher for Sponsored Brands.

These kinds of figures may help explain why marketers look favorably on Amazon ads relative to Facebook and Google, even as they cite challenges with Amazon such as limited reporting and audience data.

The full Merkle report can be accessed online here.

About the Data: Figures on spend are based on Merkle’s clients in North America, limited to those which have maintained active programs for at least 19 months, have not significantly changed their strategic objectives or product offerings and also meet a minimum threshold spend.

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