Facebook has decided to generate some revenue from its Instagram photo sharing application/website as users across various parts of the world have reported that they’ve started seeing ads in their account newsfeed. Facebook had purchased Instagram in 2012 for a billion dollars and it was quite keen to generate ad revenue from it.
Investors who were surprised by Mark Zuckerberg’s decision would be now happy because of the below 2 reasons:-
- With an impressive growth rate of 25%, Instagram has more than 300 MN active users. Thus, it can easily generate millions of dollars in revenue and make Facebook inc more profitable. The US, Asia, and Europe audience will be the major contributors to Instagram’s earnings.
- A research published on eMarketer website claims that Instagram’s revenue for 2015 will be approximately 0.59 BN USD. By 2017, it will increase to a whopping $2.8 BN. Most of the earnings will be generated from mobile devices i.e tablets and smartphones.
Instagram will be powered by Facebook’s ad technologies. According to this online photo sharing service, 1000s of people are using the platform to sell products. To improve their sales, Instagram has introduced the below ad formats/tools:
Marquee: Advertisers can use this new utility to increase their presence in a short time. It is perfect for event organizers and movie makers. This is a unique ad format and Instagram might be the 1st app to adopt it.
Targeted ads: As the ads are powered by Facebook, Instagram will display ads suitable for the right audience who are more likely to click them. When the conversion rate is good, the advertiser will pay whatever money Instagram asks for promoting products on its platform.
The ads will be accompanied by sponsored label along with shop now and install now buttons. Thus, If you want to increase your sales or market your product, Instagram can be a great platform for you because most of its users are young and mobile phone users. According to a research, a product is more likely to be sold on a phone/tablet than on a website. Many Internet companies have thus adopted the app only strategy.