“It’s a fast, beautiful and fun way to share your photos with friends and family.”
“Instagram Description.png” by Socially Sorted is licensed under source: https://www.sociallysorted.com.au/instagram-for-business-4-words-you-need-to-know/
The history of Instagram
Instagram is a social media platform that allows users to share pictures or short video clips they take anytime anywhere. This social networking platform was founded by Kevin Systrom and Mike Krieger in San Francisco, the United States, initially launched on the iOS system in 2010. It was then acquired by Facebook in 2012 for one billion USD and still operates independently after acquisition.
Photo illustrated by Alexander Koerner/Stringer/Getty Images. Hyperlink original source: https://onezero.medium.com/facebook-scraped-1-billion-pictures-from-instagram-to-train-its-a-i-but-spared-european-users-621cc47a2a21
Feature: Face Effects and Filters
One of the appeals of Instagram is that it holds the potential for turning any user into a photographer by helping them create more professional photos by enabling them to add filters and use various photo-editing tools (Robinson, 2020). These tools are usually used when uploading photos or Ins stories. Here’s an interesting video of “Aesthetic Instagram Filters”.
Video by Revealingappyay. Source: Youtube- https://youtu.be/Avi9_02gNV4
Instagram creates a micro-community that is composed of various hashtags, based on what users posts to target specific audiences and promote interactions. Instagram integrates many interactive elements, such as like, comment, collect as well as friendship establishment. This is where the greatest value of Instagram, existing as a consumer service platform. The platform organizes users interactions, is defined as a programmable architecture (Dijck & Poell & Waal, 2018) and online activities that take place shapes the way we live (Gehl, 2011). Later, I will analyze platform business in relation to primary operation fields, business models and concerns raised by profitable online activities.
The business model of a platform is a way of creating and capturing economic value under platform contexts (Dijck, Poell, & Waal, 2018). Value can be measured in various currencies, for example, user data, which has become a popular way of making profits besides traffic (Dijck, Poell, & Waal, 2018). Specifically, Instagram can target users precisely by analyzing the data collected to push advertisements targeting their potential users, thereby making profits.
Instagram represents the rapid development of visual networks: People carry a “digital camera ” on their phones every day to record and send photos. The rapid and huge increase of online photos is exactly the field that Instagram entered very early. It is not only a technological platform that enables the audience to share things online (Dijck, Poell, & Waal, 2018) but also a place of economic transactions for both individuals and businesses.
“Planoly.jpg” by Sitesmatrix is licensed under source: https://sitesmatrix.com/blog/top-7-marketing-tools-used-for-easy-scheduling-of-your-instagram-posts/
Primary Business Areas (Timelines)
2013: Instagram commenced its business in November 2013, introducing sponsored post advertising, referring to pushing posts to unfollowed users to increase the viewership of the post as well as brand exposure. Michael Kors is the first brand to buy ads on Instagram. This sponsorship has brought Michael Kors nearly 34,000 new followers within 18 hours of sponsored posting, and the increased number of followers is 16 times the number of followers without sponsored posting (Taube, 2013). It also received nearly four times likes after sponsored advertising compared with the average number of likes for MK’s previous posts (Taube, 2013). Although it is difficult to evaluate how many audiences will be eventually converted to MK’s consumers, the traffic and attention brought by sponsored advertising are what Michael Kors (businesses) wants. This attracts other brands to settle on Instagram and consider whether it is cost-effective to promote ads on Instagram.
(the screenshot of Michael Kors’s first Instagram post) Source: https://www.instagram.com/p/gLYVDzHLvn/
2016: With the advances in technology, Instagram can turn well-performing posts into ads, analyze demographic features of the audience, and display times and coverage (Khaimova, 2021). Platforms process vast amounts of data from the content database and user database automatically (Driscoll, 2012; Mayer-Schönberger & Cukier 2013; Turow, 2012; van Dijck, 2014), not just user demographics and locations but also detailed information about audience values, consumer behaviour and personal tastes, which are generated, reserved and analyzed (Dijck, Poell, & Waal, 2018). In this way, business value can be better achieved and the earned money helps to upgrade major fields of operations and better cater to user needs.
2020: Instagram has launched Reels in over 50 countries, which is designed with the intention to “beat” TikTok. Reels allows users to upload 3 to 15-second short video clips to share on Instagram but has a limited filter gallery.
Due to its several primary fields of operation, Instagram has gained a huge of success:
- Instagram was ranked 63rd in the 2021 List of “The Ranking The Brands Top 100”, representing the powerful brand finance (Brand Finance, 2021).
- Instagram reached the 4th position with 503 million downloads in the category of “Most Downloaded Apps in 2020” (Omnicore, 2021).
- It is estimated that 71% of American companies use Instagram in business (Omnicore, 2021).
- The recent data shows the monthly active users has exceeded 1 billion, which is a milestone for Instagram (Omnicore, 2021). The number of users is still rising (see figure below)
“Instagram user statistics. png” by Omnicore is licensed under eMarketer.
To Make Money:
Instagram creates value from content, data and attention by selling advertisements and subscriptions to charge fees (Dijck, Poell, & Waal, 2018).
There is a multisided market for Instagram to make money: Instagram offers postings to both individual users and advertisers, providing advertisers with a channel to deliver advertising information to consumers. In other words, the platform serves two separate groups (users and advertisers) as an intermediary (Mansell, Robin, & Steinmueller, 2021 ), allowing users to interact with brands/advertisers. Furthermore, 70% of users claim that they are looking for their next shopping opportunity on Instagram. As a result, network economics are generated due to the growing number of users and advertisers usually value the traffic of the platform, increasing their demands of this specific platform service. Thus, Instagram mainly relies on advertising to make profits by taking commissions from advertisers and attracting all kinds of businesses to enter.
According to the statistics from Omnicore, a direct marketing firm, Instagram generated US$20 billion advertising revenue in 2019, which is steadily increasing annually (Guttmann, 2020). In 2021, the potential advertising coverage of Instagram reaches 1.16 billion users and its advertising revenue is expected to reach US$18.16 billion (Omnicore, 2021).
Emergence of Concerns
Instagram makes greats profits from its activities, which has raised some concerns about the company.
- False advertising from businesses
Many businesses pay Instagram a great deal of money for sponsored content to target more potential audiences with advertising algorithms. But the push of advertisement leaves a negative impression on some users and even receives resistance from some users. Additionally, the in-app payment function makes consumers pay directly on Instagram instead of skipping to a third-party site. The resulting issues are if the advertised product is suspected to be false or misleading advertising, whether Instagram as an advertising publisher should be responsible for it, whether the rights and interests of customers can be guaranteed, and which party should be responsible for its after-sales services?
- Privacy issues
Privacy issues are inevitable for any social networking platform. Pasquale (2015) proposes that to a certain degree, social media platforms are becoming increasingly opaque due to the undemocratic control in the economic process with hidden algorithms, business models and data streams. When users sign up, they have to passively accept that the platform holds and tracks private records, and their consumption preferences will be managed by the platform. This suggests that the interests of users and platform operators are often contradictory. As such, since Instagram is also commercialized, it raises typical consumer concerns, such as data security and privacy (Dijck, Poell, & Waal, 2018). However, there is no way for the user to determine whether their data is sold by Instagram for commercial or academic purposes. Instagram cannot guarantee that users’ data will never be tracked and identified through digital traces even if it promises its users that their privacy will be protected through de-anonymization or hidden data sources (Ravn, Barnwell, & Neves, 2019). For example, in 2019, Instagram suffered a data breach, more than 49 million users’ profiles were exposed, which has caused great concerns among the public.
“Three Ways to Pursue Cloud Data Privacy with Medical Records web.jpg” by Boing Boing is licensed with source: https://boingboing.net/2015/03/11/dutch-scrap-surveillance-law-o.html
Viable Solutions: Accountability & Responsibility
Instagram, as one of the leading social platforms, should give full play to public value, making contributions to promote the benefits of mankind. The platform should take the responsibility to regulate itself by governing and establishing a social credit system. Platform governance plays an important role in the intersection of datafication and making profits, which mainly involves two ways – one requires the national government to govern platform companies and the other requires platforms to govern users (Kloet, Poell, Guohua, & Fai, 2019). The state can intervene to regulate when necessary while the social credit system can be used to evaluate a user’s credit rating. If businesses or celebrities post false advertising, their credit rating will dwindle; once lower to a certain extent, there will be a “risk display” on the account home page to remind the viewers.
In conclusion, from tracking Instagram’s business development, we have reasons to expect it to achieve better business development, generating enormous economic benefits mostly from sponsored advertising, but we may also concern about the uncertainties from the fierce competition, and data management and utilization.
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Khaimova, S. (2019). A Brief History of How Instagram’s Business Features Have Evolved. Retrieved from https://www.perfectsearchmedia.com/blog/brief-history-how-instagram-s-business-features-have-evolved
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Ravn, S., Barnwell, A., & Barbosa Neves, B. (2020). What Is “Publicly Available Data”? Exploring Blurred Public–Private Boundaries and Ethical Practices Through a Case Study on Instagram. Journal of Empirical Research on Human Research Ethics, 15(1–2), 40–45. https://doi.org/10.1177/1556264619850736.
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Taube, A. (2013). Michael Kors’ Widely Hated Instagram Ad Was Actually A Massive Success. Retrieved from https://www.businessinsider.com/michael-kors-wins-with-first-instagram-ad-2013-11.
Van Dijck, J., Poell, T., & de Waal, M. (2018). The Platform Society as a Contested Concept. In The Platform Society. DOI:10.1093/oso/9780190889760.003.0002.
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