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Instagram tops half a million advertisers

Instagram on Thursday announced it has topped more than 500,000 advertisers, up from just 200,000 in February, and in the year since it launched Instagram ads, 1 billion actions have been taken — including clicking through to a website, downloading an app or adding an item to a shopping cart.

With Facebook's revenue growing 63 percent in the second quarter, investors are looking to a couple of key areas where Facebook can tap into its massive user base and keep up that growth. And Instagram, with 500 million monthly active users and 300 million daily active users, is in the spotlight.

Thursday's announcement provides a look at how the photo-sharing platform is drawing a broader and deeper assortment of advertisers.

Facebook CEO Mark Zuckerberg speaks about Instagram during a press event at Facebook headquarters.
Justin Sullivan | Getty Images

"We have a great diversity of industries: consumer goods, e-commerce, retail and technology," says James Quarles, Instagram's VP & GM of monetization. "Big businesses are trying to catch up their ad dollars with time spent. I think we're part of that shift of budgets into digital/mobile."

Instagram is tapping into behavior they're already seeing on the platform: About half the audience follows a business, a percentage that has been pretty consistent.

Quarles adds that 60 percent of people say they learn about products and services from Instagram — about retail fashion and accessories, or new movies. And three-quarters of people say they take action after they've been inspired.

"If you're a consumer goods company and you're advertising on TV, you don't have measurability: This specific ad generated this amount of sales. The precision and the magnitude," said Quarles.

In contrast, he said 70 percent of the ad campaigns Instagram has studied have generated a statistically significant lift in "conversions" — getting people to adopt a behavior.

One reason the company's seen such growth in the type and number of advertisers is the introduction of business profiles about two months ago. Since then 1.5 million businesses have converted to these profiles that enable companies to offer customers different ways to interact.

Quarles said small businesses are "using video and they follow through."

"When they get someone's interest, they capture their email or are able to continue the relationship in other ways," Quarles said. "The inspiration that happens on Instagram is driving actions."