Acquiring Instagram for a $1 billion may have been one of the smartest decisions Facebook Inc (NASDAQ:FB) founder and CEO Mark Zuckerberg ever made. The photo-sharing app just reached over half a million advertisers, which is more than double the number it had in February. The app just recently celebrated a milestone of reaching a number of 500 million in global users.
According to Amy Cole, Instagram’s brand development head, the top 5 advertising verticals on the photo sharing app were now consumer packaged goods, e-commerce, retail, entertainment, and technology. She added that since Instagram launched its own advertising program in September, more than one billion actions related to the ads were made.
Last August, Instagram launched a business-centric service that offers brands to include a contact button on their page as well as an algorithm that measures the personality traits of their followers. The move came after it was revealed that 50% of Instagram users are following a certain business and that 60% of Instagrammers use the app for product/service research.
Instagram just revealed that 1.5 million companies have converted over to the business-optimized profile.
Apart from launching “Business Tools,” Instagram also launched its “Stories” feature, which many SnapChat users found familiar. The feature enables users to upload and share snippets of their day, draw doodles on photos, etc. Instagram was accused of ripping off SnapChat but this did not seem to affect the popularity of the app at all.
Cole clarified that Stories “goes back to the concept that people are coming for inspiration.” The feature wad meant to provide meaningful content to users who are not directly connected to brands and popular personalities, including celebrities, and artists.
“You can think about mood boards or daily rituals. Stories has shown different sides of the business and given light to areas that aren’t necessarily a permanent feature,” Cole added.
The controversy surrounding Stories proved to be a good thing for Instagram. Cole credits the feature for the app’s popularity among advertisers. The announcement also revealed the location of its advertisers, showing that most of Instagram’s advertisers are from the U.S., the UK, Canada, Australia, and Brazil.
Meanwhile, Instagram’s vice president of monetization, James Quarles, gave a statement on the app’s unprecedented growth saying that doubling its advertiser base shows that Instagram is “a place where inspiration sparks meaningful action for businesses, from finding new customers to driving sales.”
Of course, the real winner here is Instagram’s parent company, Facebook. It’s expected that Instagram – along with What’sApp and FB Messenger – will provide long term revenue for Facebook. The social network’s stock saw a marginal increase to $130.04 in the stock market Thursday. In pre-market hours however, ticker was down by more than 2 percent. FB currently prints a one year return of about 39% and a year-to-date return of around 24%.
Facebook did not disclose Instagram’s total ad revenue but Credit Suisse Group (NYSE:CS) analysts estimate it to be around $3.2 billion for fiscal year 2016. By 2017, the firm noted that Instagram would be raking in more than $5.2 billion in sales.
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