Instagram: Popular, But Still Not Bringing in the $$$

18 Apr

On an audience basis, Instagram is a huge hit. The photo-sharing social media site now has more than 100 million followers, up from 30 million followers about a year ago. But, as we know, this alone does not make Instagram a success. It also needs a business model to monetize its performance. This is quite important to Facebook, which invested a lot to acquire Instagram.

As reported by Victor Luckerson for Time: “A picture’s worth much more than a thousand words to Facebook. Last April, the social media giant agreed to buy the quickly growing photo-sharing social network Instagram for $715 million. The sky-high purchase price, well above Instagram’s $500 million valuation at the time, led some to wonder if Facebook was helping to fuel another tech bubble. A year later, the jury’s still out on whether Instagram will one day reap huge profits, but the company is laying groundwork to put the monetization machine in motion. By many metrics, Instagram has had an impressive year under Facebook. [Yet], despite the large growth numbers, it’s difficult to say whether Instagram has earned its price tag. The company earns no money and has not talked about monetization strategies its executives are mulling, though CEO Kevin Systrom has said that Instagram’s goal is to become a self-sustaining business.”

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24 Responses to “Instagram: Popular, But Still Not Bringing in the $$$”

  1. Dacia Johnson April 18, 2013 at 4:48 pm #

    Instagram is definitely a favorable app for many people because it is easy enough for anyone to edit and share photos. Many companies are using the app to promote products and even host contests. It may not be generating the revenues that Facebook wants, but I think they will keep looking for a way to make it profitable and eventually succeed.

  2. Fangxing April 18, 2013 at 10:20 pm #

    Instagram is a popular app for everyone. A lot of people use it to beautify their own pictures and share them in the social media. Even though Instagram can not earn the money temporarily, it can encourage the people to share the pictures more frequently. Maybe, the Facebook can attract some advertisers by Instagram for money.

  3. Li Yang (Lee) April 19, 2013 at 3:59 pm #

    Instagram is a good place for social media marketing. Nike, Intel, Macy’s and so many famous companies use Instagram to advertise their new products, new services and Corporate philosophy. I think advertising and member fee can help Instagram to earn money in the future.

  4. Jeffrey Benesch April 19, 2013 at 4:21 pm #

    Instagram has become hugely popular over the last year. I remember when i first got the iPhone that Instagram was the first app I downloaded. But what interests me is how exactly they make any money at all. Unlike Facebook which has advertising as a major source of income, Instagram has no ads. While that is a huge benefit to the user it doesn’t help make the company money.

    • Alex Kofsky April 19, 2013 at 5:10 pm #

      Instigram has become such a huge success, for it’s very easily accessible and a fun way to upload edited pictures. I agree with previous statements that Insitgram is at a disadvantage, for it contains no advertisements, unlike Facebook. Therefore in order to make a profit, Instigram should charge instead of being a free iphone app.

  5. Harrison Jakobs April 19, 2013 at 11:56 pm #

    Instagram is more valuable now that Facebook owns it than it was alone and I think that between both companies, they will find a way to make it become profitable. Maybe to get monetization they need to start charging for their app which is now available for free. They can also charge for photo storage which will bring in revenue if people continue to post as many pictures as they currently are.

  6. lucia April 20, 2013 at 5:04 am #

    I doubt on the integration of Instagram into Facebook Home. Some young teenagers like Instagram because of its fashion and young company. With integration into the same brand name, I’m afraid the large users would switch to other picture sharing apps.

  7. Giulia Murphy April 20, 2013 at 2:53 pm #

    I think Instagram has become a great tool in social media and marketing. For companies, I think it is very similar to blogs and sites like Pinterest. Companies do not use it for major advertising but rather to enhance a company’s brand or image. For example, I follow Gap on Instagram and the photos they post are not only of clothes (or the price or where customers can buy them) but instead they post pictures they represent Gap’s lifestyle and and photos that enhance their “Be Bright” campaign. If Instagram begins to charge, I’m not sure it will still appeal to consumers as much.

  8. Shannon Chadha April 20, 2013 at 10:07 pm #

    Over the past year Instagram has become a huge success and grown a lot. Although it is not used for advertisement it does have many benefitting factors. Companies can use it for advertising and marketing. In order to make money though Instagram might have to consider charging. I do not think they should charge the average person using it personal use, but instead should charge companies using the app for advertising or marketing.

  9. Li Pang (Lianne) April 21, 2013 at 1:55 am #

    Of course, Instagram is one of the good apps in my smartphone. Using the app, people can share their life experience and companies can upload their latest updates and fashion news. In terms of business, it is reasonable to charge those companies using Instagram for advertising. In terms of individual users, I think some of users will stop using the app if it begins to charge.

  10. James April 21, 2013 at 12:34 pm #

    Instagram is an interesting application, but it’s a fad, and is immensely overvaluated at this point. Unlike Facebook and Foursquare, it’s practical uses are very limited. It’s one immense value would be to sell its image library to Google for Google Glasses visual library… However, Facebook and Google are partnered up in enough things, that that may be in the works already.

    (For those curious, when you take an Instagram picture, you have the option to geolocate it on a map. Google is building a vast image library that could find huge value in personal photos of various locations.)

  11. Pin-Chu Chen (Debby) April 21, 2013 at 5:47 pm #

    Instagram is an very interesting and easily accessible application. For smartphone users, they get used to take photos anytime and anywhere in order to share photos with their friends immediately. I think that it is just like twitter. Although, it didn’t have exact business model now, the popularity of Instragram is still lasting and catch on.

  12. Alex Patokin April 22, 2013 at 4:10 pm #

    Instagram cannot be effectively monetized which is why they tried to change privacy agreements months ago where they were trying to push for the ability to sell the pictures users would upload. Only thing that caused was pissed people. The idea of ads won’t work either, mobile users won’t see ads and everybody on browsers these days runs some sort of Adblock or NoScript.

  13. Christopher Brooks April 22, 2013 at 5:13 pm #

    Even though Instagram has become so popular, I do not see how Facebook will make money off of it unless they put ads on your news feed. I think that would decrease the popularity of Instagram because no one wants to see a bunch of ads. A lot of companies do use Instagram to promote their products so maybe Facebook could find a way to charge theses companies a fee to do so.

  14. Chelsea Gillyard April 22, 2013 at 11:10 pm #

    Despite the fact that I like Instagram just the way it is, from a business perspective, it isn’t making any money for anyone besides the people that sold it to Facebook. It is an easy to use app that I would not pay more than .99 cents for an upgrade for and would honestly stop using if I started seeing advertisements popping up everywhere. However, from Facebook’s point of view, there is no way they would have spent $715 million on a service that will not eventually make them a profit. I am interested to see what changes they will make to Instagram.

  15. Jhenna Zepeda April 22, 2013 at 11:39 pm #

    I recently started using Instagram and, while it is entertaining, I could understand why it is not making any profit. For starters, there are no advertisements so there is no revenue coming in from that. I agree that Facebook would not have invested and bought the company if they did not think it would be profitable; however, Facebook has become incredibly cluttered with advertisements. First ads on the sides were added, then there was “sponsored” posts that show up on everyones feed, and now there is even the “give a gift” option. Facebook has become very commercial and I have a feeling that Instagram is going to become like that as well.

  16. Minnie Ding Wang April 23, 2013 at 6:50 pm #

    I do believe Instagram could get profits since it is so popular and own a lot of users. They might need to consider to change a lit bit their marketing strategy. They could offer some charge services such as make cooperation with photo agency to print and deliver the photos to consumers.

  17. Lingling Li April 24, 2013 at 9:17 pm #

    Most photo services allow for free subscriptions and limited storage, and begin charging for storage beyond a certain level. Instagram could do this. It could also choose the option of selling advertising, including location-based or contextual ads relevant to the text or content of users’ photos.

  18. James Matzen April 25, 2013 at 5:15 pm #

    I do not have an instagram right now, and I am pretty sure I will not be using it anytime soon. Many of my friends use it though so I am familiar with how it works. One possible way to increase revenues is to maybe charge companies for posting pictures that are blatant advertisements. Additionally these companies can maybe pay extra to get into the most popular section or maybe a completely new section strictly for advertising. Companies would want to make the advertising pictures interesting enough while also showing off the product they are pushing on people.

  19. David Pepe April 27, 2013 at 12:13 pm #

    The Facebook buy out of Instagram has always baffled me. As user of Instagram I do enjoy the social network, and like the easy to read news feed of pictures and comments my friends post. However, I still have trouble really seeing Instagram having a value of 715 million. The only true way to monetize on Instagram would be to have featured pictures from companies that they pay Instagram to put into your news feed. Similar to the featured tweets Twitter uses. This still wouldn’t be that much of a monetary gain because there is no real way to target specific audiences on Instagram unless you track the hashtags that people use on pictures, which people don’t always do.

  20. Jiaqi Sun April 29, 2013 at 12:21 am #

    I am a Instagram user, and I think it is a great app for social network. It is a very easy app, its free for anyone to download and use it. First I saw the title I was little surprised that Instagram not bring in $$, and then I realized that many people use Instagram making money, but Instagram company doesnt gain any profits from that. I would suggest Instagram should change the market strategy. For example, so many people use Instagram, they always like to edit their pictures in order to make the pictures looks better, maybe start to charge a little bit for add a cool background or other fun stuff. Im sure it will make a different.

  21. Christine Yang April 29, 2013 at 9:03 pm #

    Instagram has high potential to become a major social media for business or self-promote in the future. Currently there are many brands such as Marc Jacob or even recent new brands are using Instagram to share their pictures to the public. They are not only showing their products, but also others events pictures to increase their brand awareness. Moreover, people are using hashtags to increase people to like their pictures or follow them. Worrying about privacy issues, they have settings to set your profile as private or public. Instagram helps to increase other new products that relatives to Instagram such as tweegram out in the market as well.

  22. Erin May 12, 2013 at 10:33 pm #

    The future success of Instagram is in brands. Look at the current numbers: 59 of the world’s top 100 brands are on Instagram. Beyonce posted a Pepsi ad which got 320,000 likes. Next, Instagram will likely enact sponsored posts to create revenue, just as Twitter has sponsored tweets and Facebook has sponsored posts. This is where future of advertising lies, and smart companies like Facebook are always looking to invest in the next big thing.

  23. Diana Parisotti May 13, 2013 at 9:58 am #

    I feel as though Instagram right now has more influence on the youth than does Facebook. Many of my friends no longer have a Facebook and only use Instagram due to the fact that they do not like how Facebook is always trying to advertise to them. On Instagram many people, including myself follow actual stores or brands, such as clothing companies in order to see new products or ideas for outfits. Possibly in the future Instagram can make these companies pay a fee to allow followers click on the picture of the product and be brought to the website where they can buy it.

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