In April 2012 Facebook’s Mark Zuckerberg agreed to buy an 18 month old app with 13 employees, 30 million users and not a penny made from advertising – for $1 Billion. Not an insignificant sum. At the time everyone was waxing lyrical about the fact that Facebook had paid more than twice the valuation for the app and that it was signs of a new .com bubble. Furthermore, most viewed it as a sign that Facebook was terrified of this new app. Of course they were, that app was and is Instagram and this week they have announced record growth to 400 million users, surpassing Twitter and also ready to bring in an estimated $600 million in ad revenue in 2015. That .com bubble never really materialised (or hasn’t burst yet) and the $1 billion Zuckerberg dropped on this baby suddenly looks like a pretty shrewd move! The guy might be an uber geek but I think you have to doff your metaphorical cap to him.
Instagram hits 400 million users
This week Instagram announced that they had acquired a milestone 400 million users, with 100 million of these joining the photo sharing app in the last 9 months demonstrating some of the fastest growth seen in the social space. Let’s remember that Twitter have never had 400 million active users and are currently struggling to grow much past 300 million. Hitting this milestone has a number of implications, not least the fact that Instagram now has significantly more active users than Twitter’s 316 million. Instagram’s attraction for the selfie generation means that the number of young users joining the network surpasses both Twitter and Facebook, with Twitter struggling to attract users from all generations and Facebook’s highest growth demographic being amongst those with grey hairs and wrinkles.
It was always coming
For anyone who uses social media they will have naturally seen Instagram’s increasing popularity and as such the fact that they have more users should not come as a surprise. For us it is the 100 million new users in the last month that is the real eye opener. We knew the growth was fast, but not that fast. And it is not just in the US, it is global. 14 million of their users are based in the UK alone. Unlike Twitter, Instagram also appear to be set on continuing innovation and improving the core service of the platform. For example, in an attempt to rival Twitter’s USP of real time news Instagram unveiled their ‘Explore’ section allowing users to see a snapshot of the most talked about news and also the ability to search for locations rather than just hashtags or people. Their CEO Kevin Systrom has openly stated that this is a major aim for the app so expect more and more innovation in this area as they look to capitalise on the initial attempts at real time video by the likes of Periscope and Meerkat.
Facebook are cashing in
Facebook have been carefully developing their advertising model, generating huge amounts of cash for the network. Instagram has access to Facebook’s powerful advertising tools and earlier this Summer announced that they have opened up their ad API to the world (dropping their minimum ad fee which in the UK was around £50,000). Whether their testing over the previous 18 months will prevent users from being bombarded with excessive amount of ads is yet to be seen but early reports show that advertising on the platform will be considerably more expensive than advertising to their owner’s users. Forecasts from eMarketer state that Instagram’s ad revenue will continue to roughly double for the next two years to nearly $3 billion in 2017. This increased ad price is indicative of the faith that the Instagram have in their platform and the desire for brands to get in front of their loyal audience.
Interestingly upon buying Instagram Zuckerberg was quick to state that the app would be allowed to run as a separate entity and post to other networks. Whilst this may still be true to an extent, over the past 3 years Instagram have become more and more integrated with Facebook, with users only able to post their full photo to Facebook’s ~1.5 billion users. It’s not really surprise that you can only post a link to Twitter and not the full photo, after all Twitter is severely wounded at the moment and the other networks are highly unlikely to show them any mercy.
Sucks to be Twitter right now – especially since they wanted to buy Instagram before Facebook.