News
Facebook buys Instagram. Soon to become yet another advertising platform?
The Internet is a flurry today with news of Facebook having bought out the photo editing and sharing app Instagram to the sum of $US1 Billion in cash and stocks.
Facebook have advised that the App will stay independent of the rest of Facebook, but for how long? 1 Billion dollars is no small amount of money, especially for a platform which not only makes no profit, but doesn’t even have the current capacity to do so.
The last few years have seen a number of extremely high valuations for sites that produce no profit, of which Twitter and Tumblr counted amongst. Can you imagine the run costs of these organisations? Not only do they make no profit, but they must burn through cash like the American Government, and as such need to find ways to stay afloat. All the while they are kept afloat by investors buying into the business (but only until they can make their big return when the advertisements start rolling in). Just look at Twitter who started their ‘Sponsored Posts’ program, or Tumblr and their own ‘Highlighted Posts’ platform.
Don’t get me wrong, this isn’t anti-Facebook by any means, Instagram always needed to find a means of profit, so now being part of their big brother, they could even continue to bleed, and still be counted as an asset amongst Facebook’s growing banner men.
From a more inspirational standpoint, the founders Kevin Systrom and Mike Krieger have netted $US500 Million dollars from this venture, which is amazing, considering the application is only 2 years old.
Tagged App Store, facebook, instagram, Kevin Systrom, Mike Krieger, Tumblr, twitter
RandomheroApril 11, 2012 at 7:01 am
Interesting read indeed, I wonder what facebook plans to do with Instangram now
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TashWordApril 11, 2012 at 6:17 pm
Yes, I’d sell my business to Facebook (or anyone else really!) if they offered $500 million
Maybe Facebook is just seeing it as valuable to wipe out a competitor rather than for profit making (their view could well change of course!)
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LinxApril 11, 2012 at 10:44 pm
There are many people conjecturing on why Facebook bought Instagram. Whatever the reason is, it is part of a greater plan – a strategic movement forward (or backwards). But I think it may have to do with the movement towards mobile photo sharing and websites like Pinterest.com growing so fast.
There seems to be a movement towards more visual sites, like the sharing of a photo album. Just my thoughts really…
anotherspacemanApril 11, 2012 at 11:27 pm
Facebook is so powerful you have to wonder if what they say will happen will by default become what happens?
Look at apple and touch screen technology – it had been around before but was always a bit rubbish, then apple decide to go with it and now it’s everywhere!
Must be easy being a businessman by the time you get to self-fulfilling prophecies!
investorApril 12, 2012 at 11:09 am
When i first head about Facebook buying them out i was not really surprised. Google has been buying out big companies for a long time, and i figured Facebook would start doing the same.
When i heard about the HUGE price tag, i was very surprised. I do a lot of coding, and the app is very easy to actually code. The team did an amazing job with marketing, and had an amazing pay-day.
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UmiNoorApril 18, 2012 at 2:25 pm
Very true. In another blog post that I’ve read, the writer also said that Instagram is so easy to create. Not much coding required but yet because it was able to attract millions of users, it became an interesting acquisition to Facebook even though it hasn’t even made a single cent in profit. I think right now if you’re able to attract traffic to your website or your products, Google or Facebook or Yahoo may be interested to buy you out.
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angeldrbApril 14, 2012 at 9:39 pm
The real plan of Facebook as to why they bought Instagram might be obscure, but I’m sure it’ll be for Facebook’s benefit in the long run.
On a side note, I think Instagram was ridiculously overpriced in that transaction.
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UmiNoorApril 18, 2012 at 2:29 pm
It certainly was overpriced. I don’t know what Mark Zuckerberg was thinking with putting such a high price tag on something that may or may not be profitable. I wonder how long would it take Facebook to get back that amount from the acquisition?
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BreakfreeJuly 13, 2012 at 6:27 am
Seeing, that Instagram has gotten so popular Facebook decides to buy it. Well, 1 billion is not little money so, it must have some big plans with Instagram, maybe it has to do with the next changes of Facebook. Whatever it is I can’t wait to see it.
ollierexxJuly 18, 2012 at 1:14 am
Yea, Instagram Has already become another place for affiliate marketers spam just like facebook, tumblr and pintrest. I think Facebook paid way more than they should have for it
theaaaJuly 18, 2012 at 3:40 am
Well, Facebook probably had a plan already before buying the site. You don’t burn a billion dollars on something just because.
We just have to wait and see. Hopefully they make it interesting because Facebook’s kind of getting boring.
LiquidatorBruntJuly 19, 2012 at 4:02 am
Instragram is a really amazing story. Who thought making pictures look older and worse would be something people would be really interested in? Making the photos look like old Polaroids is marketing nostalgia. Genius!
DesireeJuly 21, 2012 at 10:01 pm
Oh, I’m sure Facebook didn’t buy Instagram out of charity. Maybe they aren’t going to turn it into an advertising platform in the near future, but they have to make up for their investment eventually.
I wasn’t crazy about Instagram anyway, so they can advertise all they want on it, I don’t really care.
ladyjessicaAugust 6, 2012 at 12:28 pm
I so thoroughly enjoy Instagram, but I’ve got to say, I’m pretty worried about what will change when it does become monetised. Granted, I haven’t had the application for very long (I’m an Android user, so it only became available a couple of months ago) but I’m already completely addicted. I feel like sponsored links would annoy me possibly more than the average user, as I only browse my friends photos on there, and never the ‘popular’ pages. I like it to be really personal!
One thing that I will say for the buy out is that I’ve been able to view and comment on photos in a web browser. I only noticed this capability about a week ago, but it’s something that’s frustrated me in the past – that if I want to comment on an image, I have to go and get my phone and try and find the photo on there. I guess having the extra money behind them means that they can improve services like that one.
Hopefully they will be able to add new filters, and the thing that I REALLY want them to be able to do is let you choose which filter you like, then choose whichever border you like, instead of having the one that automatically matches the filter. Fingers crossed!