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18th October 2013 |  Written by Alex Duthie

Instagram turns three, but now it has to make money…

In case you missed it, Instagram, the ridiculously popular photo and video sharing social platform, turned three years old last week. During those three years, the company swiftly overcame some tough obstacles (including a huge backlash to its proposed privacy changes) to remain the selfie addict’s app of choice. In three short years it has racked up some impressive feats. For instance, it has amassed 150 million users worldwide, who have collectively shared a brain-melting 16 billion photos. Figures like this prompted social giant Facebook to snap up the company for an estimated $1 billion in 2012 as it obviously saw the money making potential.

instagram

Image: Cherry’s Cakes 

The future of Instagram

So it’s fair to say the past three years have been rather successful for Instagram. But what about the next three? It’s clear that the company needs to start making money and its new owner has identified the need to bring in revenue through advertising. Just last week, Instagram announced it will be placing ads in photo streams within the next couple of months. The rollout will initially begin in the United States, with Europe likely to follow soon after.

There is, of course, likely to be hostility from some disgruntled Instagram users, much in the same way that Facebook and Twitter fans sulked when their favourite social networks ‘sold out’ to advertising. Instagram will need to be careful with its advertising tactics though – there are plenty of competitors ready to snap up fans who find the new adverts too obtrusive. Instagram is aware of this though and has promised the ads will reflect the type of photos and videos each user already views. What’s more, the ads will initially come only from brands who currently share content on the platform, which could end up being a really smart move. We found the below mock-up of what a Starbucks ad could look like and, as you can see, it’s not too dissimilar from the pictures that we’re used to seeing on the site.

starbucks instagram ad mock up

Image: TBG Digital

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Your Comments

  1. It’s always the problem though, isn’t it? It was the same even with Google when they first started looking at monetization options – they simply took what GoTo were doing, and made it ten times better (I seem to remember GoTo based their PPC model purely around highest spend, which obviously works against Google’s ethos of relevant results).

    Twitter still seems to be battling with monetisation models too (promoted tweets are great, but aren’t very accessible unless you have a higher budget); Instagram will probably have to experiment quite a bit before they get it right.

    Good post, anyway. Thanks for sharing.

  2. Hi Gareth, thanks for the comment.

    I get the feeling that Instagram’s ad pricing will be too prohibitive to the smaller guys, as is the case with Twitter’s promoted tweets. You’re right though – it may take them some time to get it right, but I guess we’ll find out soon enough!

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