Instagram, the photo-sharing app Facebook Inc. acquired for $715 million in 2012, generated more than a quarter of the social-media company’s revenue last year, according to people familiar with the matter.
The app brought in about $20 billion in advertising revenue in 2019, said the people, who asked to remain anonymous because the figures aren’t public. That beats Google video unit YouTube, which recorded $15.1 billion in ad sales — a number parent company Alphabet Inc. revealed Monday for the first time. Facebook declined to comment.
Instagram has become increasingly central to Facebook’s future, with users and advertisers flocking to the app even as sales growth slows at the main social network. Still, Facebook doesn’t disclose revenue for Instagram separately in earnings reports, instead preferring to highlight the integration of its properties, branding them as a “family of apps.” The team in charge of direct messaging on Instagram, for example, now reports to the Facebook Messenger team, and the company is changing Instagram’s branding to “Instagram from Facebook.” Instagram has more than 1 billion users, a figure Facebook hasn’t updated since 2018.
Instagram had no model for bringing in revenue when it was acquired by Facebook. Now, the app makes money the same way Facebook does: by selling advertisements that look like regular posts in the app’s main feed and in disappearing “stories” posts. Facebook has increased the frequency of ads on Instagram in the past couple of years, to help bolster the company’s sales as Facebook’s news feed becomes more saturated with marketing posts.
Bloomberg has reported that the picture-sharing application made approximately $20 billion USD in advertising revenue alone in 2019, which is nearly a quarter of Facebook Inc.’s total revenue for the same year. In 2012, Facebook purchased Instagram for $715 million USD prior to the app having an established strategy to sell advertisement space within its interface. The executive and creative minds over at Facebook formulated the concept to sell ad space in Instagram’s ‘disappearing’ Stories feed.
According to Bloomberg, these astronomical figures came from an undisclosed source that is familiar with the organization and asked to remain anonymous because this information isn’t necessarily for public consumption. But if this information happens to be true, Instagram’s $20 billion earned in ad revenue, outperformed Google‘s YouTube platform, which produced a total of $15.1 billion in advertisement dollars in 2019.
Facebook Inc. owns Instagram, WhatsApp, FriendFeed, LiveRail, Oculus VR, and more to which they do not specifically reveal any individual company’s annual income. After news leaked of Instagram potentially earning $20 billion, Facebook has declined to comment on the news.