With Facebook and Twitter
seemingly old news in the social media world, many are looking to how Instagram
may shift the social media paradigm. The
picture sharing app has seen impressive growth, with 150 million monthly active
users. This is an increase of 128
million since the company was purchase by Facebook last year.
Currently, the company is still
building out its place within Facebook. The
division only has 50 employees, very few of which deal with any sort of revenue
stream for the company. This brings up
the most important question surrounding Instagram. How is it going to generate significant
revenue? Granted, the company recently
displayed its first ad a couple days ago.
If Instagram chooses simply go the display ad route, it will be closely
following in the footsteps of Twitter and its parent company Facebook.
However, it is interesting to
think of whether there is not a more unique (and potentially more lucrative)
way to leverage the already robust Instagram user base. Display ads are an easy win. Yet, given the importance that brands are now
attaching to the opportunity to effectively leverage social media, Instagram
may be better served to develop unique ways to better serve these brands for a
price. Display ads have questionable ROI
for many companies. Yet, firms consistently
tout the ability of integrated marketing – serviced through social media – to provide
valuable return on investment. This is especially
true when that investment costs little to nothing. Perhaps, there is an opportunity to provide a
menu of premium features which companies will value and charge firms for these
services. This route may also enable
Instagram to retain the authenticity which some fear it will lose if it
bombards its users with ads.
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