Will Instagram Fit the Traditional Social Media Paradigm?

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.