Not that you could dodge this news, but Facebook purchased Instagram today for One BILLION dollars. Yes, One BILLION. There’s plenty of speculation as to why Facebook purchased Instagram. From engineering resources to capitalizing on the fact that photos create great “stories,” there’s plenty of potential reasons. I’m sure there’s not 1 single reason and yes I do happen to think that one of the reasons was to stop Google from purchasing them.
All that said, here’s a few quick thoughts:
- It’s not about photos as stories
- I think a big part of the acquisition is all the geo-location data they just received. Think about it. Nearly every Instagram photo contains some type of geo data. That geo data is built on foursquare’s platform. This allows them to out foursquare…foursquare…without having to buy foursquare. Keep in mind, Facebook purchased Gowalla earlier this year.
- The open graph is all about you and your interests. Instagram is the visual expression of those interests. It’s the food you ate, the people you were with, the sunset you saw, the slope you boarded down and more. Consider Facebook’s “Timeline” format. Instagram allows you to fill in the gaps…with visuals. Awesome. Brilliant.
- Hipstamatic was a competing app that burst on the scene roughly the same time as Instagram. They chose a pay per download model. They chose the micro payment approach, where as, Instagram took the let’s build something awesome…give it away for free…create a huge following…then sell it for a BILLION dollars.
- Facebook has struggled to monetize the mobile experience. At fMC, they announced that as part of Facebook Premium advertisers could FINALLY extend their ad buys to the Facebook mobile experience. Having Instagram as part of the Facebook family will allow Facebook to monetize the mobile experience like never before.
I’ve said for the past 2 years, we’re going to see more and more consolidation in the social space. Social is such a young industry, but it’s growing up very quickly. Today’s acquisition announcement shows us that it’s growing up even faster than many of us thought it would.













