Instagram is turning out to be a revenue-making machine, just like its parent company, Facebook Inc. The photo-sharing app is expected to bring in revenue of $3.2 billion in 2016, according to a report from Credit Suisse.
The forecast, reported by Bloomberg, pegs Facebook’s first-quarter 2016 revenue at $5.24 billion, with Instagram contributing $572.5 million. That’s nearly 11 percent of the company’s total revenue for the quarter, though Facebook doesn't break it out in its reports.
What’s striking is that Instagram only opened up advertising to all businesses in September. At the time, advertisers could promote 30-second videos or standalone photos, then in February Instagram expanded video ads to 60 seconds, shortly ahead of the Super Bowl.
The estimated revenue for Instagram approaches Twitter’s numbers. Twitter reported $710 million in revenue for the fourth quarter of 2015. The company also reported a net loss of $90 million. Meanwhile, Instagram appears to be outshining its price tag. Facebook acquired the company for $1 billion in 2012.
Facebook touts more than 200,000 advertisers using Instagram, about 75 percent of them outside the United States. And as for user numbers. Facebook reports Instagram has more than 400 million monthly active users, which also outdoes Twitter's 320 million monthly actives.
The increasing number of ads on Instagram, however, has investors concerned about the app's future growth. Chief Operating Officer Sheryl Sandberg said the team is “constantly monitoring” how users react to ads across its products. “When we introduce ads into the news feed and continue to increase the ad load, we monitor very quickly and look at the quality of the ads," Sandberg told investors in January.
Indeed, Facebook did not introduce ads to Instagram until more than three years after buying the company. User interests from Facebook are also integrated into Instagram so advertisers can better personalize their messages.
Facebook reports first-quarter 2016 earnings on April 27.