These astonishing numbers show why Facebook can't afford to let Instagram's growth stall (FB)

pulse

September 25, 2018 1:02 PM

Instagram has grown rapidly in the six years since it was acquired by Facebook. The company initially had 16 employees and no way of making money. Now it's thought to be worth $100 billion and estimated to bring in $8 billion in revenue in 2018.

Instagram has turned out to be the best purchase Facebook ever made.

The camera-oriented social network is, according to a Bloomberg analysis, now worth around $100 billion. Facebook bought the company for just $1 billion in 2012, marking a 100-fold return on its investment.

This is astonishing, given when Facebook bought Instagram, it only had 16 employees and its founders, Mike Krieger and Kevin Systrom, hadn't worked out how to make money from the service.

The pair sensationally announced their departure from Facebook on Monday. But in the six years they've continued at Instagram post-acquisition, they have built a money-making giant.

Facebook doesn't break out Instagram's revenue, but it has frequently called out the app in earnings calls.

Analysts at eMarketer have estimated how much of Facebook's revenue comes from Instagram. Here are the numbers:

Instagram accounted for around 9% of all Facebook ad revenue in 2017:
That will more than double and Instagram will make up around 17% of Facebook's total ad revenue in
2018.
Instagram is growing faster than Facebook's core app.
Instagram is adding 300 million active users each month
Advertisers see four times as much engagement on Instagram as on Facebook.
making it easier for people to like and otherwise interact

All of this proves that Instagram is hugely important to Facebook's future growth, not least because the brand is still comparatively untainted. Facebook's main app has been marred by scandals around privacy, the Cambridge Analytica issue, and the spread of fake news.

And Facebook just isn't as cool as some of its younger rivals. Instagram is loved by younger users. It is less crowded than the main Facebook app, and perceived to be a kinder social network. Meanwhile, Facebook is losing its grip on users' attention, with time spent on its primary service down 7% year on year this month.

Tied with this, Instagram is also increasingly popular with brands, who benefit from Facebook's sophisticated targeting capabilities and the popularity of Instagram with a hard-to-reach younger demographic.

Systrom and Krieger might be gone, but Facebook can't afford to let the golden egg crack.

pulse

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng