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How Does Instagram Make Money?

Basia Skudrzyk

· marketing,money,social media,Instagram,Branding

Facebook had a great intuition for market potential when it purchased Instagram for about $1 billion in cash and stock in April 2012. Of course, Wall Streeters thought Facebook was insane. Instagram was about 2 years old, had 13 people working for them at that time with absolutely NO revenue.

 

Let’s fast forward. In 2019, according to Omnicore, a direct marketing agency, Instagram had a $20 billion revenue source in advertising alone. As you can imagine, a lot of marketing agencies shifted their budget lines to become influencers on Instagram. Actually, 69% of America’s marketers followed this pathway in 2020.

Based on these new marketing approaches, Bloomberg Intelligence report shows that Instagram was valued at $100 billion in 2018. Its activity continues to grow with 500 million active daily users. Not a bad investment for Facebook looking at the rate of return for their initial investment, but having the foresight of knowing the potential of such a great and effective platform.

The young generation seems to be the lead of the market success of Instagram. 72% of teenagers use Instagram and use it to justify which brands they associated with. When users click on the links, this automatically allows for commercials to be presented. 130 million users tap on brands using Instagram! Users actually seek out advertising for product discovery. The audience is global as 89% of users are outside of the US.

If you’re looking to grow your business and brand presence, using Instagram is a great channel to consider. Ad impressions are recorded when a user views a page that includes an advertisement. In the Internet marketing world, ad impressions are good, but ad clicks are much better. A click on an advertisement is a positive user response to go to the advertised product's site.

Needless to say, ad impressions are seen as a leading indicator of ad hits. The more people see the ad, the more hits it is likely to achieve. Just imagine the compound level of brand recognition through such an easy method of a click! Just like any great idea, Instagram is proof that if the strategy is scoped with a clear path, it can become profitable. Based on this approach, it has become a monetization model. Initially, it was just a fun idea.

Instagram is fundamentally a visual app which naturally becomes a great source for brand advertising. This is how Instagram makes money! People want to see vs just read about products that compliment who they are. As the desktop is starting to become obsolete, millennial users will certainly hold onto Instagram due its well-positioned dominant platform for advertising in today’s world.

@Instagram #marketing #branding #forecasting #creativity #strategic planning

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