Change is scary, and as an Instagram devotee, I obviously hate it. (Aren't you still reeling from the Vinestagram update?) But change is what's around the corner Instagram fans—change spelled A-D-S. Mark Zuckerberg says so.
We Get It—Instagram Is A Business
As of July, Facebook well is on track with its milestones. It poured money into mobile in late 2012, rolled out its so-called new "pillar," Graph Search, and revenue is up 53% from this time last year. The company and its gaping social maw should be content for now, right? Well, yes and no.
On Facebook's July earnings call, CEO Mark Zuckerberg didn't mince words: "Kevin [Systrom, Instagram Founder] has always been clear that we're building Instagram to be a business. And that we expect that over time we're going to generate a lot of profit from it … probably through advertising."
Facebook knows Instagram is valuable—$1 billion valuable, though that included some expensive defense, making it not just a cool acquisition—and intends for it to make money.
The good news? It might be a while. Facebook made an impressive 41% of its revenue this quarter from mobile ads, which finally are implemented and working as intended. The bad news? Facebook made 41% of its revenue this quarter from mobile ads—and they're working as intended, with new revenue streams bubbling up green.
Facebook Thinks Instagram Needs To Grow Up
Sure, Instagram looks like a ripe little mobile revenue opportunity, but right now the photo sharing app is small potatoes. Just ask Zuckerberg: "There are so many directions to expand this in.… We think that the right focus for now is to continue to focus on increasing the footprint for Instagram." (Phew.)
Instagram's 130 million monthly active users are a drop in the gigantic Facebook bucket. Facebook has 819 million monthly-active mobile users. The big kahuna of social networks weighs in around 1.1 billion users, bringing regular ol' web use into the mix. Instagram, by comparison, is teensy, though mobile traction shows no signs of slowing down. Anywhere.
Dear Instagram Ad Designers: Good Luck With That
Instagram is beloved and full of cats and memories. Its users are sensitive, myself included. Considering that most of us have caught on by now to the at times bizarre or wholly irrelevant ads creeping into our Facebook News Feeds, Instagram ads are going to have to be slick.
Designing those ads will take time (hopefully a lot!) and brainpower. Think about it. On the Instagram app (the Web viewer is just a utility, really) you see one photo at time, and since you can follow and unfollow freely, unlike cluttered Facebook, 100% of the content is relevant. For users, alarm bells go off easily, and that's mostly because the photo sharing app is just so good the way it stands now. (Except for the videos. Grumble, grumble, grumble.)
Turning on the money spigot at Instagram now and riling the vocal, selfie-loving masses is just plain unnecessary. Until Instagram grows up, that is. "When the right time comes, we'll think about doing advertising as well," Zuckerberg said. "And I think that's going to be a really big opportunity."
But Instagram isn't big enough yet—and here's hoping that it's a slow growing season.