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With the recent purchase of Instagram by social media giant Facebook, speculation is at an all time high. The question on everyone’s mind is why Facebook would spend $1 billion to acquire the photo-sharing application Instagram. One of the more obvious answers to that question is the massive following Instagram has.
Instagram has a following of over 30 million users and, with the recent move to the Android market, the number is still rising. However, members are not something Facebook would ever need. With a fan-base of over 850 million users worldwide, the social media mogul may be looking at a way to monetize the increased user base.
With Instagram’s recent move to the Android market, the mobile segment Instagram is sure to gain is likely one of the largest reasons for Facebook’s acquisition. Although Facebook has a mobile application and many mobile users, most feel it is lacking compared to the desktop variant. Facebook’s main concern with mobile users may be they simply do not know how to make money off of them. With no ads in the mobile version and more users checking their accounts on their mobile devices instead of a laptop or computer, revenue is lost.
The following quote is proof of their revenue generation through the mobile platform:-
“Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.”
This will leave many with one question in their mind. Why purchase a mobile app that does not currently make money for their user base? With no ads in their application and no other means of revenue, Instagram has a very large user base to support with minimal resources. Instagram has state their goal has always been to build a large user base and then begin serving them ads. Even still, $1 billion dollars is a lot of money to make up for.
Instagram As Competition To Facebook
Instagram CEO Systrom made a statement that they wished to “help every user on the earth share their lives and discover the world through a series of beautiful images.” If Facebook felt Instagram could pull it off, they very well could feel their model would be threatened by it.
The biggest issue seen here is that Instagram only offers it’s users the ability to take a photo, use one of many filters built in to the application to alter it, and then post it for their friends and family to view. That would hardly seem to be a threat to Facebook given it is only a photo sharing application. There are already many filtering applications available to mobile users and Instagram would be just another sharing network to sign up for.
Is Facebook After Data?
The strongest arguement for Facebook’s aquisition would be the bottom line, data. With Instagram users having uploaded over 100 million photos which are geo-tagged and personal, Facebook could be looking to use this data to further their ad targeting. Facebook already has a massive amount of personal data on most of it’s users and there are 100 million photos uploaded to the social site every day. The tagging of these photos also include business locations and other people who also have their information on the site. With this massive amount of user data, Facebook could be making strides to further their ad targeting.
Keeping Instagram Away From Competition
The aquisition of Instagram could also have simply served as a means to keep it away from Google and Twitter, two of Facebook’s largest competitors. This also brings Instagram’s engineering team to Facebook. The addition of these key members could be what is needed to vastly improve on their mobile application and realize true gains through a restructuring of both their mobile and web interface. One thing is for certain, Facebook is deeply rooted and will do what they must to stay in the game.
Instagram has a following of over 30 million users and, with the recent move to the Android market, the number is still rising. However, members are not something Facebook would ever need. With a fan-base of over 850 million users worldwide, the social media mogul may be looking at a way to monetize the increased user base.
With Instagram’s recent move to the Android market, the mobile segment Instagram is sure to gain is likely one of the largest reasons for Facebook’s acquisition. Although Facebook has a mobile application and many mobile users, most feel it is lacking compared to the desktop variant. Facebook’s main concern with mobile users may be they simply do not know how to make money off of them. With no ads in the mobile version and more users checking their accounts on their mobile devices instead of a laptop or computer, revenue is lost.
The following quote is proof of their revenue generation through the mobile platform:-
“Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.”
This will leave many with one question in their mind. Why purchase a mobile app that does not currently make money for their user base? With no ads in their application and no other means of revenue, Instagram has a very large user base to support with minimal resources. Instagram has state their goal has always been to build a large user base and then begin serving them ads. Even still, $1 billion dollars is a lot of money to make up for.
Instagram As Competition To Facebook
Instagram CEO Systrom made a statement that they wished to “help every user on the earth share their lives and discover the world through a series of beautiful images.” If Facebook felt Instagram could pull it off, they very well could feel their model would be threatened by it.
The biggest issue seen here is that Instagram only offers it’s users the ability to take a photo, use one of many filters built in to the application to alter it, and then post it for their friends and family to view. That would hardly seem to be a threat to Facebook given it is only a photo sharing application. There are already many filtering applications available to mobile users and Instagram would be just another sharing network to sign up for.
Is Facebook After Data?
The strongest arguement for Facebook’s aquisition would be the bottom line, data. With Instagram users having uploaded over 100 million photos which are geo-tagged and personal, Facebook could be looking to use this data to further their ad targeting. Facebook already has a massive amount of personal data on most of it’s users and there are 100 million photos uploaded to the social site every day. The tagging of these photos also include business locations and other people who also have their information on the site. With this massive amount of user data, Facebook could be making strides to further their ad targeting.
Keeping Instagram Away From Competition
The aquisition of Instagram could also have simply served as a means to keep it away from Google and Twitter, two of Facebook’s largest competitors. This also brings Instagram’s engineering team to Facebook. The addition of these key members could be what is needed to vastly improve on their mobile application and realize true gains through a restructuring of both their mobile and web interface. One thing is for certain, Facebook is deeply rooted and will do what they must to stay in the game.
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