Guest comment: How Facebook's Instagram acquisition will impact social sharing

Facebook’s $1bn acquisition of Instagram startled the digital industry, but what does the future hold for the popular photo app? Rupert Staines, European MD of RadiumOne, examines the potential effect on social sharing and the backlash Facebook is facing from the Instagram community.

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Although $1billion is a huge amount of money to pay for one company, the investment is reflective of the sharing phenomenon that has taken the Internet by storm over the past year (nma.co.uk 10 April 2012). Today, the Internet is no longer a place to visit in order to just collate and gather information, but a platform which consumers primarily use to connect with friends and peers and share ideas and content.
Last year, Mark Zuckerberg observed that online sharing is growing at an exponential rate with four billion things being shared per day. A “share” should be considered anything from an email, a cut and paste, a shortened URL, or, of course, a photo, and as sharing is fast becoming the currency of the internet, it was natural for Facebook to further embrace the phenomenon. As it gains an estimated 27 extra million users from its new purchase, all eyes will be on how Facebook will take advantage of the increased sharing activity, as well as its access to a new pool of targets.
Equally interesting will be how Facebook deals with the major backlash it’s receiving from Instagram users. No sooner had Mark Zuckerberg published his blog post announcing the acquisition, than users were closing their accounts in droves, voicing fears that their feeds will be flooded with advertising. Understandably, this could prove to be a major headache for Facebook, but it would appear necessary if it’s to reach its valuation.
While assumptions have been made that Facebook is looking to knock out the competition, there is a more serious issue around justifying its valuation in world that is becoming increasingly mobile focused. Facebook made a staggering $4billion from advertising last year, but it has a potential valuation with the imminent IPO, of $95billiion. It has to validate this somehow and one of the key ways to meet this astronomical figure is naturally through advertising. However, the problem facing Mr Zuckerberg is that, despite it being a colossus of the Internet, Facebook remains a walled garden – it can only reach the consumers within its perimeters, and this could prove to be highly restrictive. Of course, its consumers can be targeted in a relevant fashion, but in order to foster engagement (and meet this valuation), it’s likely that the level of advertising will have to be intense. This is why social targeting across the entire web (which represents roughly the remaining 90% of Internet use) is more favourable. It’s not as saturated, but it remains relevant to the user in question.
The other concern for Facebook is that alternatives to Instagram do exist. Hipstamatic, Incredibooth and Via.me are just a few of the independent photo sharing sites on the market ready and waiting to attract those users looking to defect from their preferred service.
However, consumers should remember that targeting has becoming common place now and, after all, Facebook made its name through the sharing of photography. Providing Facebook doesn’t saturate its new Instagram audience with an abundance of adverts, this could well be a nifty move on its part.
By Rupert Staines
European managing director
RadiumOne
www.radiumone.com/

61 Comments

  1. Good article, but again along with the many that I have read regarding the topic the point of the aquisition has been slightly missed.
    Facebook did not necessarily aquire Instagram for the content or the users (Although a massive bonus!) but for the technology and the infrastructure that Instagram has.
    They use an extremely complex infrastructure to not only create the photo sharing platform but to ensure there user experience was delivered. If you think about it millions of users in a short space of time using your service, “How the hell do we handle the data?!” this is the question that Instagram asked and nailed it with their server and tech solution. Giving a real like example of what I mean is think about Twitter – how many times did you see the blue whale “We’re over capacity come back later” how many errors were there on Instagram with more users in a shorter space of time – there’s the answer.
    So yes, correctly so there is the concept of the photo sharing capabilities and lapping up the users but something that marketers and the general public seem to skip over is the tech lying behind all the pretty pictures. This is no fault of their own as users, marketers and most people only see the chasis of the car but rarely look under the bonnet, if you catch my drift…
    You can read a little bit more here if you’d like to don your star treckie techie hat for a moment or two:
    http://highscalability.com/blog/2012/4/9/the-instagram-architecture-facebook-bought-for-a-cool-billio.html
    As mentioned, a good and interesting article and hope this provides more insight as well.

  2. Now all persons have using some Facebook as a social media site and me also. I think Facebook is a best personal or official communication and all types of social sharing site. Now Facebook is a more demanding site, so that is the main point of Google was giving some more priority to Facebook.

  3. Patricia Clark

    Thanks to Mark Zuckerberg for creating a social media website it is Facebook, and now this is very demanding site of the world. Really I like this and I have been sharing any images, photos, video clips and quotation to my friends. Actually many bad guys are hacking this and sharing some bad things but otherwise all are ok.
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  4. Aron Luther

    Actually much more peoples are browsing internet only for checking their social media accounts, but maximum peoples are using only for sharing some images or flirt charting and most probably social media’s are changed our social standards. Mark Zuckerberg is create some more advance technology for improving Facebook and it is also valuable for any business promotion, but bad guys are completely creates some bad images of Facebook’s in our societies.
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  7. Now all persons have using some Facebook as a social media site and me also. I think Facebook is a best personal or official communication and all types of social sharing site. Now Facebook is a more demanding site, so that is the main point of Google was giving some more priority to Facebook.

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