Instagram will top Facebook as the largest U.S. social ad platform by 2025

According to a forecast by eMarketer, Instagram will become the largest social advertising platform in the U.S. by 2025, surpassing Facebook. The platform’s U.S. ad revenues are projected to grow 15.9% year-over-year, adding $5.1 billion to reach $37.13 billion. This will account for over half (50.3%) of Meta’s U.S. advertising revenue for the first time.

Instagram’s ability to generate higher ad revenue per user has played a key role in this growth. In the U.S., Instagram earns $223 per user annually, compared to Facebook’s $191 and TikTok $109.

Instagram will surpass overall social ad spend growth in the U.S.

Instagram’s U.S. ad revenue growth is predicted to outpace overall social network ad spending in the coming years. Advertisers may increase their budgets for Instagram faster than for other social platforms.

Instagram could benefit further if TikTok faces a ban in the U.S. due to its ongoing legal challenges. Should TikTok lose its Supreme Court appeal, advertisers might reallocate ad budgets from TikTok to alternative platforms. Instagram could capture over 20% of the $12.34 billion redirected ad spend, according to eMarketer estimates.

eMarketer projects that, By 2026, the platform will generate over $42 billion annually, boosting its share of total social ad spending from 35.5% in 2024 to 37.5% in 2026. Instagram’s overall share of U.S. digital ad spending will also increase, reaching 11.1% by 2026.

Reels will drive Instagram’s revenue growth 

Instagram’s focus on video-first content like Reels, has contributed to its growth. Jasmine Enberg, a principal analyst at eMarketer, describes Instagram as a “video-first platform.” 

Short-form videos like Reels, YouTube Shorts, and TikTok are dominating users’ attention. Users spend two-thirds of their time on Instagram Reels watching videos.

Reels accounted for 19% of Instagram’s impressions in Q3 2024, according to Tinuiti data. The format's cost-per-thousand impressions (CPMs) also saw consecutive quarterly increases, narrowing the gap between Reels and Feed CPMs. eMarketer predicts that by 2025, Reels and other non-Feed formats will contribute more than one-quarter of Instagram’s ad revenue.

Changing trends in ad revenue

Instagram’s Feed and Stories ads contributed the majority of its ad revenue—53.7% and 24.6%, respectively, in 2024. However, these shares are expected to decline as Reels and other ad formats, such as Explore, gain traction. By 2025, less than half of Instagram’s worldwide revenues will come from Feed ads, while Facebook’s revenues will still largely rely on Feed ads.

‍

‍

‍

‍