Instagram Business Model? Facebook Acquisition


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Photo by franzrusso

As you know yesterday Facebook as acquired the mobile photo giant Instagram.

Just a couple of weeks ago I was wondering what could have the future reserved for Instagram, because I couldn’t figure out how the company would have monetized. The service is indeed free for everyone, starting from the app to the photo hosting, and since they haven’t put any interest in creating profile pages that people could visit from outside the app, there was quite no way to have some profit. I thought about selling promoted photos to show in the timeline, or promoted profiles, but for a company with such a service it wouldn’t have been enought.

And then.. here comes the acquisition. 1 Billion Dollars.

I’m pretty impressed by this decision from Palo Alto, the money spent does really worth the value? For me not, and I have quite some good reasons for saying this.

Zuck says that they are “committed to building and growing Instagram independently“, this means that they will not shut down trhe service, and this is really a good piece of news. Fact is that (always from Mark statement), the know how of the team will be used to improve the photo sharing features of the most famous social network. My point is.. If you were interested in developing your mobile app by implementing some vintage look to the shots, why don’t you use your many developers and just do that? I mean.. Insted of paying 1 billion dollar, you could have done it with just a few thousand.

1 Billion dollar spent in a company that doesn’t even have many chances to monetize, just a few days before the debut in the stocks market. We don’t also know the real value of Facebook until they do the IPO too, and from my point of view, and from their balance, they are already overvalued!

I think this probably the beginning of a new bubble.. the #socialbubble . We have already seen an example with Groupon that has lost great part of their value since the stock debut in the NASDAQ, who will be the next?

Tell me your opinions

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About Stefano Giudici

International Business student, interested in social media management, marketing, innovation and finance. Love photography, motors, design. Mac user and geek.

One response to “Instagram Business Model? Facebook Acquisition”

  1. Buddy says :

    I believe everything posted was very reasonable. However,
    consider this, what if you were to create a killer title? I am not saying
    your information is not solid, but what if you added a headline that
    makes people want more? I mean Instagram Business Model? Facebook Acquisition | The hard life of a
    nerd.. is a little vanilla. You might look at Yahoo’s front page and note how they create post headlines to get people to click. You might add a related video or a pic or two to grab people interested about what you’ve written.

    Just my opinion, it could make your posts a little bit more interesting.

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