Instagram as a Growing Business | Hacker News Reader

Instagram as a Growing Business

blog.instagram.com

37 pointshornokplease45 comments

There is no problem with a service monetizing. It's a great day when a service like Instagram is finally sustainable and relies on customers, not VCs.

But they had three years to think about monetization, and the BEST plan they came up with was advertising. Not freemium, or selling products, or any other business model.

Advertising.

TV advertising "started out slow" too. Now it's 1/3 of the viewing experience. With ads, you never, ever, get fewer ads. It's always more. More annoying, more intrusive, on a good day just more "targeted."

Of course, we've seen ads coming to instagram for years. The good people at Facebook somehow managed to reinvent the way everyone interacts, but can't find a way to make money directly from the people who use their service.

TL;DR...Monetizing isn't bad. But advertising is unimaginative.

Why doesn't Facebook just charge every user $1 per month to have an account? Want less of this or more of that, you can pay more - but a base fee of $1/month seems reasonable.

I believe Facebook's ARPU is about $10/year.

So even $1 or $2/month would make a big big difference.

I guess the logic is Metcalfe's law means keep the barrier to entry low.

Metcalfe aside, it's probably 10000% easier to raise ad rates than it is subscription rates. Plus, subscriptions will invert their customer model and give users power that they likely would rather not give away.

Monetizing isn't bad. But advertising is unimaginative.

Ads is not an easy business. You have two sets of customers, i.e. users and marketers. Striking a balance between the needs of both of these sets is always a key. Also, you need to build necessary technology like ad servers, bidding tools, reporting & analytics etc. "Ads" are a product too. And building a great product takes time.

> But they had three years to think about monetization, and the BEST plan they came up with was advertising. Not freemium, or selling products, or any other business model.

Instagram is for-profit company and if their ARPU via advertising is significantly greater than other options then it's in their stockholders (currently FB and public markets) interest to go via advertising route. I'm sure they must have considered all the options internally. But reality is very few people are willing to pay for online products.

IOW, a race to the bottom. Lowest common-denominator business.

I'm genuinely interested in alternatives to advertizing - what would you suggest?

This is definitely the largest problem for social media companies in my mind. No matter what they do to generate revenue they will be vilified by the average user. Nobody wants to pay for anything so the natural course of action is to use ads, then everyone complains about ads and leaves or uses the service less. The other course of action is to sell data about users, but that will piss off users even worse.

One alternative I can think of that would not drive away users would be to charge the largest companies that use the services to promote their products. Perhaps charge Oreo for the right to make posts to their social media account on Facebook or Instagram.

I am not an instagram user, but I would venture giving users options might be a viable alternative. Let them choose between $10 a year or different ad variants.

Our aim is to make any advertisements you see feel as natural to Instagram as the photos and videos many of you already enjoy from your favorite brands.

Their stated goal should be despised and pariahed, and yet they are proud. This is the problem with Google, Facebook, and now Instagram. There is absolutely no separation of content from ads, and they do exactly as much as law will permit.

I've been deeply disappointed in all of the spam coming out of Google these days - they flood inboxes with spam from Google Play and other services, and it's a travesty for the brand. It's a little funny to watch the GMail team fighting the spam hydra, within Google itself.

Matches: from:(Google+) Do this: Skip Inbox, Apply label "google+"

This is really not a big deal. Yes, sure, they should figure out what you want to see when you want to see it but they have a limited ability to read your mind for now so requiring a little cooperation from you is not a reason to be deeply disappointed.

I'm pretty sure there are people who genuinely cherish getting a notification about being added to a circle. We're just not among them.

It doesn't necessarily have to suck like Facebook feed. I never despised placement advertising in TV shows.

> There is absolutely no separation of content from ads, and they do exactly as much as law will permit.

That's one perspective, that it's manipulative to mix the ads in with the content.

But from another perspective, they're trying to raise the quality of the ad "experience." One of the main reasons internet ads are so annoying is because most of them are irritating eyesores that are irrelevant to my life. On Facebook, though, I sometimes gain useful information from ads about local events and things I'm interested in. And the ads bother me less because they stick out less, while still being clearly identifiable.

The problem isn't that there are ads juxtaposed against content, it's that historically, the ads have been fucking awful.

Open up a GQ, Vogue, or Condé Nast Traveler. Look where the ads are and how many there are. It's quite possible that ads act as content, and have for quite some time in traditional publishing.

We’ll also make sure you have control. If you see an ad you don’t like, you’ll be able to hide it and provide feedback about what didn’t feel right.

You can control what you see... by seeing it first. On what planet is that considered "control?"

Also, I imagine they will just use a similar ad system (and UX) that Facebook currently uses (if not the same) since they are all under the same umbrella now. And if that's the case, exactly what you said, that is not "control".

For some reason the FB adds, on my feed, are very sexually suggestive. Somehow, seeing cleavage next to pics of family... seems very creepy to me. I really hate it.

Well, they show you ads based on what they know about you, so if you don't like the ad just give them more information!

Exactly. Like Pandora - here's a bunch of things we think you'll like based on what we know about you. Correct our assumptions and we'll make them better.

Except with Pandora the effort goes to improving something you actually want.

On Earth, using standard English, that is considered "control." It's not "total control," but they never claimed it was.

"the photos and videos many of you already enjoy from your favorite brands."

I do? Last I checked they were people, not brands that I was following.

It disappoints me that micropayments are such a dead idea. I like paying for things I actually use a lot better than the cognitive pollution of advertising.

Eh, kind of Wack.

I would've liked to see something creative more along the lines of enhanced functionality for brands to reach their current followers. Maybe specialized "Grab Deal" buttons.

Anything but TV commercials.

May god have mercy on their souls if they attempt some kind of youtube style locked video ad model.

I get it, we're getting a free service and they need to make money at some point -- but judging how horrible the Facebook news feed has become, my hopes aren't exactly high for this next move.

I suppose the one potential saving grace here is that it might encourage creative content from brands, as that will typically be the most rewarded. I'm quite impressed by what some brands have been able to accomplish with Vine.

How bad is your Facebook news feed?

I get 1 suggested post for every page of statuses. (So if I scroll to the bottom to load new posts, I get 1 more suggested post)

These are all somewhat relevant ads to me. One is for a dentist in my area, one is for a keychain cell phone charger, one is for instagram, and one is a company looking for IT jobs (which makes sense, since I'm a developer).

There's the regular ads on the side, but those have been there for years and remain as relevant as the posts in my newsfeed. I've even clicked one of those ads and bought something.

I'm just curious, because my experience with facebook ads is actually quite good. Maybe this is because my profile is somewhat more open than many so they can mine more data from it and I don't go around "liking" things that I don't actually want to get updates from.

I personally frown upon the ads inserted into the news stream, and I found them even more intrusive when they try to "blend" with native posts. But of course it's their right to insert them there. But what I don't like even more is that all those big players seems to not want to introduce paid no-ads accounts - maybe they wouldn't like to extra responsibility of having the paying customers.

I agree, I would happily pay an annual fee for ad-free use of Facebook.

I hadn't even thought of that. Yeah, I'd buy that. Twitter, too.

Out of curiosity, why do you feel them 'intrusive'?

Don't you think they are better since you can completely ignore them by scrolling down rather than taking you hostage to watch 30 second video or interstitial?

It removes the intimacy of your feed. Some people may follow brands, but others follow their friends and photographers whom they admire. Interjecting 'tailored content' will degrade the connection people have with the feed they subscribe to.

The revenue for an ad-free version of the app would never equal the revenue generated from the ads.

"Instagram as a Growing Business", aka how to make your users believe ads are a feature provided for them.

While obviously everyone hates ads, you have to give them credit for doing a nice job at bending this in their favor. It's a very smart tactic/approach they are using to introduce ads to the users feed.

The title of this article should read "Instagram is now a business". Seems like adding non-seamless adds for this platform is not the best way to utilize the product they have. In my opinion, they should be driving more seamless integration with their apps that do generate revenue and use this as a property to prop those up. That's really why they bought this thing, to keep mobile pictures in Facebook's realm. They should drive more integration towards that goal. They certainly did not buy it because they thought it would generate revenue and profit eventually to provide a good return on the invested capital, so why try to utilize it like that?

typical euphemism hell business speak, thanks Instagram you really care, not like those other guys!

Why do they say "we'll start slow"? Doesn't seem necessary for them to tell the public that, and it's only concerning.

It was just a matter of time before they started putting ads into the stream, so I can't really say I'm disappointed. But when they talk about making ads seem "natural" to the Instagram feed, it reminds me of debate over the ethical implications that come with blurring the lines between advertising and content.

Yet another business that took the approach of "customer adoption first, actual business model second." It's so frustrating to see this play out time and time again.

I am surprised Instagram beat Tumblr to it

It's time to monetize!

Advertising is always the most desperate business model when you don´t have any other ways to monetize. However, that's the problem if you are a generic startup for everybody and don't have a niche.

tell that to google.

Well they have improved their model, they make quite a lot of money now through the app store, Android, soon self-driving cars etc.

half-naked selfies as ads seems like the most "natural" ad.

no seriously, will be interesting to track GoDaddy and other brands whose ad wheelhouse is the tried-and-true "sex sells"...

here's to hoping its more Vogue-style ad pages rather than the sleazy/spammy display ads that tend to overwhelm the internet, not super optimistic of the former considering their parents', FB (like Myspace before it), bottom feeder trajectory.

You must be very familiar with the 'Explore' tab...

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