Written for and first published here: http://mobilemarketingmagazine.com/content/facebook-will-monestise-instagram-how
For the early-adopting hipsters that popularised the photo-sharing app Instagram,
its buyout by Facebook was welcomed like their mum turning up wearing
skinny jeans. It was inevitable that change was on the way and Facebook
has now begun testing the service as its route to making money on
mobile. Just as they find out their mum has started hanging out in East
Facebook has so far proved that you can have 1bn users and not be
making enough money. And as a publicly listed company, it really needs
to start making something back for its shareholders, particularly on the
costly buyout of the Instagram app company. Of course, as Instagram’s
co-founder, Kevin Systrom, said in a clarifying blog after the news
spread, and suggestion of a boycott gathered pace, the service was
created to become a business.
While he has denied that the company will sell users’ photos, social
advertising in-app, with branded accounts and the potential for your
preferences to be considered as endorsements are well on the way. While
Instagram says on its website that it is looking at ‘innovative
advertising’, this sounds very similar to what Facebook is doing, and is
struggling to monetise.
But if I like something on Facebook, or follow an account on
Instagram, does that mean that I advertise it? Questions have already
been raised about whether people have even ‘liked’ things that appear on
their Facebook feeds, and some have even claimed that dead people are
managing to endorse brands from beyond the grave.
“Our main goal is to avoid things like advertising banners you see in
other apps that would hurt the Instagram user experience. Instead, we
want to create meaningful ways to help you discover new and interesting
accounts and content while building a self-sustaining business at the
same time,” Systrom said.
So what does the future hold for Instagram - apart from the
inevitable need to generate some cash? As with many changes that
Facebook has introduced, while there is the usual push back and the most
determined leave the service, many people accept them as the price of
free access. If a service is free, you are the product, so the saying
goes. Users have to ask themselves what they are comfortable with
sharing while accepting less control. They have until 12 January to
remove their profiles before the experiments with brands and advertising
start to happen.
Instagram could opt for a paid-for, ad free premium service, although
this could reduce the appeal of its inventory to brands by reducing the
number of affluent, desirable advertisees. Microsoft computer science
researcher, Jaron Lanier, told Newsnight: “The internet has to be about
more than advertising or it’s a path to nowhere.” Alluding to a looming
advertising bubble, he said that if we wanted to build the ‘information
economy’, people have to be able to share money and buy things on
Facebook. But that means they have to trust it.
The question has started to be asked – can and will people start
charging for their data? Or could they be given more opportunity to say
‘yes, I want advertising about cars, holidays and business solutions,
please do not send me things about…’? For more on what these
developments could look like, see i-allow.
Could this very 21st century problem end up with one social network
bringing down another? The #boycottinstagram campaign on Twitter sure
hopes so. Or is this all just a Twitter storm in a tea cup?
Meanwhile, Facebook's founder Mark Zuckerberg has announced the donation of $500m worth of Facebook stock to charity...