Report Blames Sluggish Uptake By Older Demos

According to new data released by eMarketer last week, Instagram’s stellar growth run is starting to show the first signs of fatigue.

In 2019, Instagram's US user growth rate will have dropped to single digits for the first time to 6.7%, down from 10.1% in 2018.

Starting in 2020, and through the end of its forecast period in 2023, eMarketer estimates that the social media platform will grow slower than previously expected in its most important market.

Growth will be at 4.5% in 2020, revised down from 5.4%, and in 2021, it will be 3.2% instead of 4.1%. Contributing to Instagram’s overall slower growth is the fact that older age groups are not joining the platform as quickly as anticipated.

Instagram's heavy sub-35 skew is a demographic nuance which impacts Instagram across mature markets, including Australian and New Zealand.

For example, locally, Instagram has a potential reach of 9.7 million users in AU and 1.7 million in NZ, as per Facebook Ads Manager. According to Ads Manager, approx. 65% and 70% of AU and NZ users respectively are under 35 years of age.

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Instagram’s Dank memes, bullying, influencers and softcore pornography appear to lack appeal for an older user base.

Something which may in part have been in its thinking in 2019 when it tightened up its community standards.

To be fair, it is also perhaps the dearth of older users which helps it sustain its popularity with younger demographics.

eMarketer forecasts, that while Instagram has grown well with a sub-35 userbase this does have longer term limitations.

“While older users will not be growing as fast, there have been larger-than-expected gains in US users ages 25 to 34, at 11.4%. However, we don’t anticipate that this group will change substantially in the coming years, as increased competition from a Snapchat resurgence and the rise of TikTok will make it harder for Instagram to maintain high growth.”

The World’s Second Favourite Social Network

Globally Instagram is expected to continue to enjoy strong growth in the coming years.

eMarketer forecasts that 788.4 million people worldwide, or 20.6% of internet users, used Instagram at least once per month in 2019.

Moving forward, most new users will come from emerging or developing markets, unless, of course, it can solve its older demographic conundrum.

The US is still Instagram’s leading market based on net user numbers. India will be in second place, followed by Brazil.

Instagram is expected to remain the world’s second-largest social network.

While its worldwide user base will be less than half the size of No. 1 platform Facebook (1.73 billion in 2019), Instagram is well ahead of both Snapchat and Twitter.

Instagram is also on track to overtake Facebook in some countries and regions within the next 2-3 years, including South Korea and Central and Eastern Europe.

In the US, Instagram will be more popular than Facebook among 12- to 24-year-olds by the end of 2020.

Insta Marketing Investment Up 46.6% In 2020

While user growth in mature western markets is expected to slow, marketing investment should escalate, with Instagram’s ad revenues maintaining high double-digit growth rates.

Forecast ad revenue for 2019 is $9.45 billion, with 2020 expected to see growth of 46.6% to $13.86 billion.

Considering how lightweight Instagram’s paid marketing opportunities are, this is impressive growth. As of today, Instagram only has three paid marketing opportunities:

1. Instagram Feed
2. Instagram Stories
3. Instagram Explore

Inevitably this will alter through 2020, as Instagram both expands existing marketing opportunties and introduces new ones.

Presently, Feed dominates spend, with Stories massively under-indexed and offering excellent value opportunities for advertisers. Explore is still probably a bit underdeveloped, with Instagram yet to really unlock its search engine marketing potential.

Average cost per impressions (CPMs) with Instagram Stories can be up to 50% lower than the main Feed.

Instagram will likely benefit from a further shift within broader marketing strategies in 2020, which is a re-emphasis on brand building.

For the past twenty years, most digital marketing investment has centred on direct response or performance marketing style activity.

In 2019, brands such as Adidas, Old Navy, TopShop and Booking.com all bemoaned digital short-termism and heralded a future shift towards reprioritising brand investment.

Both on and offline.

Instagram would be a significant benficiary of such a strategic market pivot, given it is a highly visual branding mechanism. Especially when combined with its fledging suite of Branded Content tools, which form part of its burgeoning influencer offering.

While Instagram is unlikely to topple Facebook locally or globally, it will remain a growing priority for many organisations both in 2020 and beyond.