Have you ever wondered how Instagram, the widely used photo-sharing app owned by Meta (formerly Facebook), generates revenue?
While providing free access to users worldwide, Instagram has become a hub for millions of daily users, including brands and businesses promoting their products and services.
This advertising ecosystem has given rise to influencers who earn by showcasing these offerings.
But the bigger question remains: How does Instagram, the platform itself, make money? While we understand how influencers earn, let’s explore the financial side of Instagram, its history, and its revenue-generating mechanisms. Stay tuned for more insights.
Table of Contents
What Is Instagram?
Instagram, introduced in 2010, quickly became a prominent social media platform focusing on photo and short video sharing.
Users could capture moments within the app or import them from their device galleries. Similar to Facebook Messenger, Instagram allows users to chat, comment, like, and report on posted photos. Additionally, users could save content for later viewing.
Individuals and businesses alike utilize Instagram for personal and promotional purposes. Account creation involves linking to a Facebook account, eliminating the need for a separate password if Facebook is active on the same device.
In 2012, Facebook acquired Instagram for $1 billion, maintaining it as a separate entity. Instagram’s revenue model aligns with that of Facebook, now known as Meta, marking a period when Facebook sought to acquire potential competitors. Stay tuned to explore how Instagram generates revenue.
How Instagram Makes Money
Users spend a minimum of 30 minutes on Instagram during each visit, with many turning to the app for product discovery and potential purchases.
Instagram has implemented various strategies to generate revenue. Stay tuned to explore some of the avenues through which the platform makes money.
Advertising, similar to Facebook, is a primary source of revenue for Instagram. Advertisements contribute significantly, making up around 40% of Instagram’s total income.
The platform boasts over 2 million daily advertisers, highlighting the substantial role advertising plays in Instagram’s revenue stream.
Similar to regular advertisements, Instagram also generates revenue through Story Ads. These ads are featured within the stories of individuals and businesses and presented as a slideshow.
The content disappears after 24 hours. Placed strategically between two-story slides, these Story Ads contribute to Instagram’s revenue, as the platform gets paid for featuring them.
Instagram also earns revenue through Sponsored Posts, which are akin to the stock photos users share on the platform.
However, Sponsored Posts include tags and a call-to-action button that directs users to the advertised product or service. This feature allows Instagram to monetize the content shared by users.
Carousel Ads serve as an extension of traditional advertisements on Instagram. Users can swipe through multiple photos or videos within a single ad, providing a more interactive and engaging experience. Instagram generates revenue through these Carousel Ads.
In addition to the various forms of ads mentioned earlier, Instagram also incorporates advertisements within the “Explore” section.
When users navigate to ‘Explore’ to discover new content, they encounter ads that align with their interests and preferences based on the accounts they follow.
This provides another avenue for Instagram to generate revenue through targeted advertising.
So, that’s the scoop on how Instagram rakes in its revenue. The majority of its income comes from strategically placed advertisements.
Given the constant engagement of users on the platform, it makes sense that Instagram leverages this to generate revenue through various ad formats.
If you were curious about how Instagram keeps the lights on, this article has likely provided the answers you were seeking.
Now armed with this knowledge, you’ve got a glimpse into the financial workings of Instagram. You can also check out how WhatsApp also makes money.