Given its hefty $715 million price, there’s no doubt that Facebook is looking to monetize Instagram over time — it would be insane not to. But with the acquisition behind it, we’re left wondering exactly how Facebook plans to earn back that cash for shareholders.
Facebook’s next step is unknown, but not entirely unpredictable. The obvious first question is: Will ads come to Instagram?
According to Business Insider, the answer to that question is yes, but the proof they’re citing doesn’t reveal anything conclusive. Facebook’s Carolyn Everson, the VP of Global Marketing Solutions, simply told the publication: “Eventually we’ll figure out a way to monetize Instagram.”
Monetization ≠ display ads.
Instagram may in fact feature ad spots someday, as Facebook does now, and promoted posts could also be on the way, but there’s something much more likely already in the works. Now that Instagram’s user data is readily available to Facebook, the company can access entirely new data points which tackle a problem it had long struggled with: location.
This shift began quite a while ago, when Facebook started displaying where users had been via its Places module. For many users, myself included, that sensitive data was only sent to Facebook by way of geo-tagged Instagram photos.
And now, new policy changes means Instagram user data can be directly provided to Facebook’s partners – those geo-tagged photographs don’t even need to be shared – and that creates an entirely new level of advertising possibilities.
Facebook’s image of you has been taken to a new level: everything from where you like to eat (based on all those shots of your food), to where you travel (thanks to strange trends like taking pictures of your feet at the beach/pool), is up for grabs.
The bottom line is, yes, Facebook could just clutter Instagram with ads, but why would it ever risk that when Instagram can instead serve as a data miner’s wet dream? Why potentially alienate users when they’re most likely active on Facebook as well?
Facebook is better off leaving the network (seemingly) untouched, quietly gathering all the juicy details in the background. That data can then be put into use on Facebook, greatly increasing the potential value-add the social network can offer to advertisers.
Facebook doesn’t need ads to monetize Instagram.
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