How does Instagram make money? A peek into success

Instagram logo paint splash art

Introduction

Hello and welcome to my article series where I look into the business model of some of the most successful businesses of our time. This time around we’ll be taking a look at the social media platform, Instagram. We’ll be looking to answer the question “How does Instagram make money?”

I have published similar articles about Reddit, Facebook, WhatsApp, and WordPress.

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About Instagram

Instagram is a social media platform owned by Facebook with a focus on sharing images and videos. While the platform can be accessed via the web, its focus is mainly on its mobile app.

Instagram was created by Mike Krieger and Kevin Systrom and had its initial release date back in October 2010. It was acquired in 2012 by Facebook for $1 billion, in a mix of cash and stocks.

How does Instagram make money?

As I am sure many of you already know, Instagram is 100% free to use. Just like many other platforms, it generates its revenue from running advertisements to its users. Given that the company is also owned by Facebook, I think it is safe to say that they have access to the same amounts of data as Facebook.

I wrote an article partly explaining Facebook’s spot in the data market here.

With such an abundance of data, they can easily provide highly targeted advertisements, which are highly sought after by advertisers. Naturally with higher demand comes a bigger paycheck.

When did Instagram start making money?

In an interview with The Wall Street Journal in September 2013, It was announced that the platform would be ready to sell advertisements by September 2014. Before this, the company was initially funded by a number of investors and later Facebook, after its acquisition.

The company had up until then been focusing mainly on user growth. It is common practice to avoid heavy monetization early on in order to grow a stable user base, after all.

However, monetization efforts began as early as October 2013. They announced that ads in both video and image formats would start appearing over the next few months. The ads would be shown in the regular news feed, in between organic posts coming from regular users. The ads were very easy to identify, with a small text in the corner saying “Sponsored”.

Who owns Instagram?

As I’ve mentioned earlier, Instagram was founded by Mike Kriger and Kevin Systrom. However, it is today mostly owned my Facebook. It was purchased for $1 billion and was Facebooks biggest acquisition to date at the time.

Instagram was still independently managed by its founders up until September 24, 2018, when it was announced that they would be stepping down from Instagram. On October 1, 2018, it was announced that Adam Mosseri would be taking their place as head of Instagram.

Can I make money with Instagram?

Of course you can! In fact, a lot of people are becoming rich from it. In modern society, there is what we call influencers, which refers to a person with a substantial online following. Just like with the targeted advertisements,  companies are willing to pay top dollar for sponsored posts, shoutouts and partnerships with these influencers.

So start uploading selfies today! With hard work, luck, and dedication you could be making a lot of money one day. It helps having a bikini-bod, though.

I really hope that I was able to answer any questions you had with this article! If I didn’t, or if you think I got something wrong, please feel free to send me an email. You can reach my contact form in the navigation bar, at the top of the page.

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