However, these plans may run into a few obstacles, especially on Instagram, which we estimate will generate nearly $44 billion in global ad revenues this year (with about $25 billion coming from the US).
Instagram doesn’t say how much money it makes from Story ads, but the Stories section in the app contains a significant amount of paid content right now.
Ads appear between Stories from accounts that users follow. These ads are identified by a “sponsored” label just below the name of the account. Among the 45 Stories this analyst viewed on a recent Saturday in June, more than one-quarter were ads, which appeared after every four or five organic Stories.
The heavy load of ads in Instagram Stories indicates that the venue may have reached maximum ad load. That may be leading some marketers to moderate their use of Story ads.
Among US clients of performance marketing firm Tinuiti, ad spending on Instagram Stories placements grew significantly in 2019 but plateaued at roughly 23% of total Instagram spending throughout last year, according to the agency’s Q4 2020 “Facebook Ads Benchmark Report.”
Instead, the Instagram Explore tab has garnered an increasing share of those clients’ spend, going from 1% in December 2019 to 5% in December 2020. The trend continued into Q1 2021, when Story impressions for Tinuiti clients grew 12% year over year, while Explore tab impressions soared 85%.
Another hindrance to the growth in ad spending on Stories is that the ads don’t perform as well as in-feed ads do on Instagram. Story ads were cheaper for the median advertiser in Tinuiti’s analysis, with a 48% lower cost per thousand (CPM) in Q1 2021. But they also had a clickthrough rate 39% lower than that of in-feed ads.
There is somewhat more positive data from Merkle, which reported that 32% of its clients’ total North America Instagram spending in Q1 2021 went toward Stories. But there are also signs of a plateau; for example, Stories’ share in Q4 2020 was 33%.