Transfer Pricing Associates

Instagram's photo opp

post Wednesday April 10, 2013



With the continued and further anticipated rise of social media, it is clear that this represents a potential new market for advertising revenues. The opportunity for companies like Facebook and Twitter to make large amounts of profit from advertisers is growing. Add Instagram to the list of social media that has a tremendous opportunity at making substantial profit from advertising revenue. The value of advertisements on Instagram could further solidify the approximately $1 billion in expected ad revenue for Facebook.

One of the growing uses of Instagram is by marketing groups within major corporations. Currently 60 of the top 100 brands in the world have and utilize Instagram accounts. There is an expanding resource of consumer submitted images of a company’s product. An Instagram user who uploads an image of a product from one of the brands can then be parlayed into a marketing campaign and used to strengthen the consumer appeal of a brand. One prime example of this is a recent contest that was intended to generate marketing resources for Taco Bell. Instagram users submitted photographs of them eating a new taco from the fast food chain and were then entered to win the contest. Upon submitting the photos, users were giving the rights of the photo to Taco Bell. Eventually there was a commercial that used photos from the various entries in the competition. This is a clear example of how using social media in advertising has the ability to create more authentic publicity and marketing.

There are a handful of challenges facing Instagram in their creation of a for pay advertising service. One of the biggest is the response from consumers. Instagram originally granted the advertisers the right to use or reproduce Instagram users’ photos in their own content. The changes in the service and privacy policy lead to a substantial backlash from the roughly 90 million monthly Instagram users. Another obstacle to capitalizing on the potential ad revenue is convincing advertisers to pay for ads, when in the past they have never paid for them within Instagram. This is no easy task.

It is clear there is major potential for Instagram to generate sizeable advertisement revenue, but there are legitimate hurdles to this coming to fruition. The image oriented social media outlets, such as Pintrest and Flickr pose competition to Instagram, but each of these companies has the potential to change one subset of social media considerably.


Source:Financial Times

Image source: Free Digital Photos

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