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Instagram acquisition pays off

News, 12 December 2014

NEW YORK: Instagram, the photo-sharing app, has gained 100m new users in the past nine months, putting it ahead of Twitter for the first time while keeping a younger demographic within the orbit of its owner, Facebook.

"Instagram can engage generations of people that may not be on Facebook yet," CEO Kevin Systrom told the Wall Street Journal. It has also proved a draw for younger Facebook users who are spending more time on newer mobile apps.

"Mark [Zuckerberg] is very good at understanding that you have to have multiple offerings," Systrom observed, with messaging app WhatsApp and virtual reality headset Oculus Rift, having been added to the Facebook stable during 2014.

But in the long term, the real value of Instagram to its owner was going to be in the advertising space where it needed to become profitable.

"We're doing advertising in a fairly unique way," said Systrom. "It's brand advertising – we're seeing a lot of resonance with advertisers because of that."

Instagram only started selling advertising around six months ago, and while no hard figures were available, he said the results so far were promising.

"We've told everyone we're taking it slow on purpose because we don't want to alienate the community that is so important to Instagram's growth," he explained. So campaigns have to have high-quality imagery that fits with the Instagram aesthetic.

"It's far more important for us to continue the growth worldwide than it is for us to over-monetise it too quickly," he added.

Systrom also made clear that he regarded the competition as being television and news rather than other tech businesses. "Instagram is all about connecting people around the world with real-time information," he said. "I think about how we're competing for dollars not with Twitter and Google in the long run, not even Snapchat; I'm thinking print and TV."

At a conference earlier this year, Jim Squires, Instagram's director/market operations, outlined how traditional media were an inspiration for the app, as he advised advertisers: "Think about what you're doing in other mediums like TV, or magazines, or even other digital mediums, where it is true brand [advertising] and you want that broad reach."

Data sourced from Wall Street Journal; additional content by Warc staff