To help me understand more about Instagram, a very popular form of Social media product, I investigated how Instagram makes money and how teenagers contribute to make it even more valuable. I approached it using both Survey and searching Google.
To find out what my friends and neighbors knew about Instagram I developed a very simple survey that included just one question. ‘How do you think Instagram makes money?’. I got a wide variety of answers, however, the strongest responses included, “Businesses pay Instagram to promote their products (ie advertising)”, “I think they make money through Instagram stars gaining a large following and the sponsorship from different brands to promote products to their followers”, “Through advertising and it gets investment from Facebook”.
I was already aware that Facebook had purchased Instagram in 2012 and paid $1 billion dollars. This purchase let people know that Facebook understood the market and the future of this form of social media.
So, how does Instagram make money and how exactly do teenagers contribute to this revenue? In 2011, an article on the Tech Insider website said that Instagram didn’t really have a mechanism to get revenue. At the time people thought they could charge people to join Instagram. However, Instagram just wanted to grow its following and then work out how to make money. Instagram was only 8 months old and it had 5 million followers. Now, in 2018 Instagram has several ways of making money but it is generally through advertising. Companies pay for their advertising to appear in the Instagram feed. Companies don’t even need to have an Instagram account but can place their ads on Facebook and also have them appear on Instagram. Instagram also wants to model Snapchat and has the format to have short films.
How do teenagers make Instagram more valuable?
Turns out for teens, Instagram is much more than a medium to share photos on, it’s an extension of their identities. That brings me to my next point about how teens contribute to making Instagram more valuable. Everyone knows that the key to successful marketing is understanding your audience. Teenagers like the Instagram format and they are constantly on this app. It allows Instagram to understand what trends there are at present and perhaps test new trends. Instagram is also a good platform to launch into Instagram stardom. People but mostly teenagers, have become stars on Instagram. Once they become stars it enables them to promote products for other companies and in this way it is a very strong format of marketing to teenagers. Instagram also searches people’s profiles such as yours and mine in each country so that they can understand what interests teenagers in each different country. They use this information to assist with sponsored advertising. A good example of how Instagram makes its money is through algorithms. They are able to see what teenagers are searching for on google and other formats. In my case I recently searched for Supreme Phone cases on Google. Shortly after this I went to Instagram and on my feed there was advertising for Supreme phone cases which I had never seen before, with a link to a site that sells the cases. In some ways this feels a little intrusive that these companies are able to find out so much about me so quickly.
In conclusion Instagram was a format that initially had no way of making income. Now, following the sale to Facebook it has multiple ways of making money, particularly though the use by teenagers and through advertising that is targeted at teenagers. Facebook is able to identify all the searches that teenagers undertake on other formats and target advertising. Instagram continues to grow. It is not only teenagers who like this format but business, adults and Wannabe Instagram stars. It continues to grow as a social media platform. I’m guessing that the 1 billion dollars that bought Instagram for now seems pretty cheap.
The sources I used:
By Lucy Reburn
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