Instagram, which debuted in 2010, revolutionized the internet photography industry by normalizing image and video sharing on social media.
In April 2012, Facebook purchased the company for approximately $1 billion in cash and equity. Unlike its past acquisitions, however, Facebook intended to establish and grow Instagram independently as a separate platform aimed at Generation Z.
Having said that, Instagram’s income model remains linked to Facebook’s, and practically all of the money is earned through adverts. But before we get into how Instagram makes money, it’s vital to understand Instagram’s business model, target demographic, and business strategy.<\/p>
Kevin Systrom and Mike Krieger started Instagram in San Francisco in 2010, and it was acquired by Meta Platforms, Inc. (FB), formerly known as Facebook, in 2012. Users can upload, share, and interact with photo and video material from users all around the world through the app.<\/p>
Users and businesses can follow others and ‘like’ or share their material on Instagram through their Feeds, Stories, Reels, IGTV, Live, Shops, and chat. Instagram is available in 32 languages and has approximately one billion monthly active users, with India and the United States being the most popular. Instagram has a global user base, with 89% of users residing outside the United States. While just 32% of its members are between the ages of 25 and 32, more than two-thirds are under the age of 34, making the site primarily focused on young people, a group many marketers aggressively target.<\/p>
Meta Platforms, formerly known as Facebook, purchased Instagram in 2012. Meta Platforms is a publicly traded business that trades on the NASDAQ under the symbol FB.
The platform includes a variety of subsidiaries and consumer-facing businesses in addition to Facebook, including Facebook Holdings, Facebook Payments, Facebook Technologies, Oculus, and WhatsApp.<\/p>
Meta Platforms reported total revenue of $85.96 billion in 2020, an increase from $70.69 billion in 2019. This reflects a 21% increase in total revenue year over year. Instagram brought in $24 billion of Meta’s revenue in 2020, accounting for 36.9% of Meta’s total revenue for that year.
Instagram has various advantages that are worth their weight in gold for advertisers:<\/p>
In 2019, advertising accounted for more than 98% of all Facebook revenue. For the entire year, it earned $69.7 billion in advertising fees, with Instagram accounting for a sizable chunk of this total. Although separate numbers are not available, analyst research suggests that Instagram’s advertising growth outpaces its parent’s.<\/p>
According to Merkle’s Digital Marketing Report, advertising spending on Instagram increased 177% in the year ending in the second quarter of 2018, compared to only 40% growth on Facebook over the same period.<\/p>
Furthermore, impressions for Instagram increased by 209% year on year in the same quarter, compared to a negative 17% increase for Facebook.<\/p>
When a site visitor views a page that contains an advertisement, an ad impression is recorded. Ad impressions are essential in Internet marketing, but ad clicks are even more critical. A click on an advertisement is a favorable user response that directs them to the website of the promoted goods.
Ad impressions are thought to be a good predictor of ad hits. The more individuals view the advertisement, the more hits it is likely to receive.<\/p>