In this generation, people are actively interacting with digital media platforms, social media platforms already became an indispensable part for many internet users, because social media provides the easiest way for connecting relationship like family, friends, even strangers. ‘Instagram’ is one of the most popular social media platforms in this decade, it brings about a transformative effect to the digital media world, because Instagram developed its own business model using advertising, making a profit for marketing contents of business, influence endorsement, and it is focusing on more video feature and shopping feature form now to future.
What is Instagram?
Instagram is a visual-based social media platform, it is a free photo and video sharing app or website available on mobile phones, tablets, and computers. Instagram is eligible for anyone who is 13 and older to register an account, and the username of the account is unique for every user. The users of Instagram could basically upload their photos or videos on Instagram, and these posts would share to the followers or select group of friends for them to interact with the posts by ‘likes’ and ‘comments’, also users are able to have the private conversation through the ‘direct message (DM)’, these are the traditional functions of Instagram from the start of it launched. However, Instagram is continuously kept update on its function in 10 years, including the popular 24-hours ‘Instagram story’ and much more for users to explore.
Instagram- Historical Beginnings
Instagram was developed in San Francisco, firstly launched on iOS in October 2010, and the Android version was released in April 2012, in the same month, Facebook bought Instagram for $1 billion USD. The funders and creators of Instagram are Kevin Systrom and Mike Krieger. There were 25 thousand users created account on the first day of Instagram and reached 1 million users after 2 months of launching (Instazood, 2018). Nowadays, Instagram has over 1 billion monthly active users and more than 500 million users active daily in 2020.
First-ever Instagram Post by founder Kevin Systrom for testing
Why Instagram became so much popular?
The founder Kevin and Mike were aiming to create an app that is similar to the mobile social media apps that already exist, like Twitter, and they pivoted the characteristics of Instagram solely on communication through images, with users uploading, likes, comments, and series of interactions. Users are sending a type of ‘instant telegram’, so this is referred to as the name ‘Instagram’ (Eudaimonia, 2017). Instagram came up with a very simple idea, take a single photo of what you are doing or what you are with, share in real-time on Instagram with people in your life, and getting likes from them with a double-tap or comments with texts and emojis, this is how Instagram built the global community today. Instagram is easy and free for users, it starts as a ‘photography’ app with options of adding filters to the photos, it was a compelling function for users to make their ordinary photos looked extraordinary, as people is more interested in the image than the long texts, Instagram is conformed to the needs (Instazood, 2018). The single Instagram post could inform so much information at once, the visual contents, location, texts with caption and hashtags, the comments and likes, this how Instagram make it unique and different. Figure 1 showed a better understanding of the function of Instagram by making an anatomy of an Instagram post.
Figure 1: The Anatomy of an Instagram Post (Source: Furey, 2017)
Business Model- How Instagram make profits?
Instagram is not only a social media platform, it is also a business that needs revenue to maintain its services and innovations. Instagram is like most social media platforms largely making a profit via Advertising, it launched the marketing solutions in 2013, the revenue of marketing ads was started from $0.63 billion in 2015 and $9.45 billion in 2019, and it is predicted to an increasing trend in the future years (fig 2).
Annual Instagram advertising revenues in the United States from 2018 to 2021(in billion U.S. dollars)
Figure 2: Annual Instagram advertising revenues data (Source: Statista, 2020)
Instagram made the advertising content in a most ‘comfortable’ way for users with no pop-up ads. Instagram optimizes the Advertising contents into each of their features (fig.3), the ads are all embedded into the daily viewer section of Instagram, such as the promotion-ads posts in-between the home page, and a story ad appear alternately in-between your following users’ stories. Enhancing the user experience while they are using the app is the key purpose of Instagram’s business model so that Instagram is offering and managing the personalized advertising service for each user by Instagram Algorithm (Bhasin, 2019).
Advertisements on each feature of Instagram
Figure 3: Advertisements on Instagram (Source: Sharma, 2018)
1. Picture Ads
Businesses are able to put a feature photo or pictures that could represent and visualized their business image on an Instagram post for brand and product promotion, sometimes the image contains the message of sale and discount to attract the users (fig 4).
Figure 4: Screenshot of Picture ads (Source: @olens_contactlens, 2020 [Instagram])
2. Video Ads
Businesses are also able to advertise video content via Instagram business models. The video ads could be more compelling to users because it is additional components of the power of sight, motion, and sound than picture ads (Sharma, 2018).
3. Carousel/Dynamic Ads
This type of ads combines multiple images or videos of one business in one Instagram promotion post, it allows users to swipe through the list of products of that business (fig.5), it is ideal for business because it shows the versatility of contents (Sharma, 2018).
Figure 5: Example Carousel ads on Instagram (Source: Sloane, 2015)
4. Story Ads
Including all three ad types that displayed in-between the story section of Instagram, the ads are either single or multiple stories.
Video: McDonald’s Instagram story ads.
(Source: Mikulin, 2019 [YouTube])
Instagram’s Industry Ecology
Based on the data of Monthly Active Users (MUVs) of social media platforms in 2019, Instagram is ranked the 6th place with 1 billion MUVs, and the first five social media with more MUVs are Facebook, YouTube, WhatsApp, Messenger, and WeChat (Lua, 2019)
Facebook made the acquisition of Instagram in 2012, it was actually the second chance that the CEO of Facebook Mark Zuckerberg offered to the founder of Instagram-Kevin Systrom. While Kevin studied in college, he refused the offer from Mark when Facebook was just a start-up company, because his mentor said that Facebook is just a ‘fad’ thing. However, Kevin held the second chance to join Facebook, and also time shows that it is not a ‘fad’, social media is the trend in the future.
“The promise of joining this giant company with all this expertise to work on a social problem together, that was the thing we really made it work.”
-Kevin Systrom (from TODAY’s interview, 2017)
Facebook has 2.23 billion MAUs in 2019 which is more than two times of Instagram, Facebook is keeping on sharing its user-base to Instagram, this offered more opportunities for brands to engage with consumers from different platforms. The synergy of Facebook and Instagram helps businesses meet their goals, a Facebook marketer could put a replacement ad on Instagram even without an Instagram account. Facebook Advert is associated with the Instagram revenue model (Sharma, 2018).
Snapchat is one of the competitors of Instagram with a similar feature on its app- the story feature. A story is posted by a photo or video within 15 seconds and it will disappear in 24 hours. Snapchat’s story feature is iconic, and it is still the main social sharing approach on its community, Instagram story was introduced in 2016 and inspired by the Snapchat story. The overall comparison of the story in two platforms is that Instagram story is a copy of the Snapchat story, but it separated on the top of the home, Snapchat is originally a story-based platform. Story of Instagram is an integrated function with more publicity, Snapchat story is for building a more intimate connection with users’ friends (Moreau, 2020).
As Instagram focus on video content development in recent years, YouTube and TikTok also became its competitors. The length of the video post on Instagram only allows the video within one minute, Instagram updated a new feature IGTV for users posting longer videos more than one minutes, this could seem as the replace section for YouTube video. Instagram’s IGTV won’t replace YouTube as YouTube has more MAUs than Instagram, but it may complement with YouTube content. Oppositely, short-video is a current and future trending content on social media lead by TikTok, Instagram updated a new feature ‘Reels’ this year for users uploading short-video in-between 15 to 30 seconds. However, ‘Reels’ is still an immature feature on Instagram due to large videos were re-posted from TikTok with a watermark on the video, and it is very similar to the ‘For You’ page of TikTok. Also, Instagram replaces the post button with Reels into the center of the home bar, which could show the extent to Instagram treats Reels as an important innovation.
Instagram- Influencer change the way people relate socially
Instagram maximized the self-presentation of users and innovated the concept of an influencer account. This type of account is used by a person with a large follower-based, has credibility and audience for its contents, and it is usually focused on one specialized area, such as beauty, fashion, and tourism. Instagram provides opportunities to these users with high-quality content to make profits on their popularity. Instagram influencer’s endorsement and promotion contents are highly affecting the behavior of their followers, mostly on the purchase decision.
Promotion contents by Instagram influencers
Instagram Innovative Business Model
In the recent update of Instagram, the ‘shopping feature’ is added to the home bar, including various kinds of product categories (fig.6). Users are able to shop the products directly from Instagram instead of entering the link provided by the business promoter. This could an innovative business model for Instagram also for social media platforms, it is more convenient for potential consumers and more profitable for the business on Instagram.
Shop Page on Instagram
Figure 5: Screenshot of Instagram’s new shopping feature
Videos: The New Instagram Updates 2020 November
(Source: Howfinity, 2020 [YouTube])
Instagram was a simple image-based app at the beginning, but it made itself becomes an all-in-one social media platform in 10 years’ time. Users on Instagram could share their life with photos long and short videos, and even shopping on Instagram. Sharing your life, interest, inspiration, and business is free on Instagram, so why not?
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