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11 April 2012 - 7:59am | posted by | 1 comment

Inflating the Facebook bubble with Instagram

Inflating the Facebook bubble with InstagramInflating the Facebook bubble with Instagram

Stephen Graham of WPR Digital and Willoughby PR takes a look at Facebook's $1bn acquisition.

At the end of last week, Facebook bought Instagram for $1bn (cash and stock). A fair wedge you’ll agree, but to induce further gobsmacking by way of illustration, that $1Bn could also buy the New York Times (NYT has 44m estimated online readers, many of whom pay for the pleasure – Instagram is free).

The Instagram app itself was launched in October 2010 and allows users to apply 17 filters to their pictures to give them a different feel before they are uploaded. The main result to date has been a plethora of photos shared online consisting of people doing any old crap with a vintage twist – it’s all the rage and the app is a huge mobile player. Clearly Facebook are keen for a slice of the social media a la mode action and, with photo-sharing pivotal to their original success, their latest acquisition is no surprise.

Further to this, the purchase price itself doesn’t really come as a shock. Last week’s deal effectively informed all of Wall Street that Facebook has the metaphorical cojones to pull off staggering seven figure deals. The fact that it comes just in time for next month’s likely IPO is no coincidence. However, the key question for digital marketing folk and the like (just as it was last year with the acquisition of Gowalla) is more to do with the functional changes that could take place with the take-over; what does this move mean for Instagram users?

Well, despite Facebook Chief Mark Zuckerberg saying on his profile page that Instagram would continue to work with rival social networks and grow independently of Facebook, there has still been a backlash from a rather vocal online community. The main bugbear being that Facebook will more than likely harvest the rich data from Instagram’s many users and sell them to the likes of you and me in the form of advertising - *rubs hands greedily.*

Certainly this is likely to be the case, and whilst the online vigilantes continue to revolt against the deal with the #instablack hashtag and calls to delete profiles, I doubt this movement is truly reflective of the app’s 25m users – a figure that will no doubt grow significantly after being rolled out for Android last week (in fact, I believe yesterday their had been 5 million downloads for Android so far). One commentator (@alexcwilliams) suggested that “If you delete your Instagram account, because Facebook bought them, you probably have a basement full of canned foods and flashlights.” Rather sweeping, but I feel inclined to agree.

The real de facto point for marketing and digital media pros to take note of is that Facebook has acquired an excellent application; images are essential to social media and this recent deal will only enrich the results that creative campaigns such as Tiffany’s True Love in Pictures and Levi’s casting ad campaign have already enjoyed.

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Comments

11 Apr 2012 - 12:35
Gordon Young's picture

Truly an astonishing deal; can't help wondering how this valuation was arrived at. A great app no dount - but worth $1billion? Just can't see it - for my money I'd rather own the New York Times!

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