With the release of Twitter’s Initial Public Offering (IPO) this past Thursday, Instagram announced that it will be incorporating advertisements as a part of its news feed. Many think that this will be the end of Instagram, but Joshua Brustein, a writer for Bloomsberg Businessweek, suggests that no one should be surprised, this business model has been foreseeable for awhile.1
Earlier this year, Instagram had incorporated a video aspect to compete with Vine as well as segue into video ads. The hope is that these ads will be shown on occasion, while still ensuring that they are appealing and of high quality.
Although some believe that ads can be a downfall to certain social networking and media sites and cause a decrease in numbers of users, this could be a huge advantage for Instagram. They can further market to preferred customer segments and demographics through advertisements of their own. In addition, perhaps in the future when the ads become more frequent, they can receive additional profits caused by other companies using Instagram as an outlet for advertisements.
Will Instagram ultimately benefit from these ads or will it result in a decrease in their 150 million users?
1: Brustein, Joshua. “Instagram Will Have Ads. Get Over It.” Businessweek.com. N.p., 03 Oct. 2013. Web. 5 Oct. 2013. <http://www.businessweek.com/articles/2013-10-03/instagram-will-have-ads-dot-get-over-it#r=nav-f-story>.
Figure 1: http://tctechcrunch2011.files.wordpress.com/2013/06/instagram-vs-vine-feat1.png?w=600