Origin
Facebook CEO Mark Zuckerberg took a huge risk when he purchased Instagram in April 2012. At the time, Instagram was a struggling startup with only 30 million users and 13 employees. The $1 billion purchase price left many people wondering how Instagram had become so valuable in only two years of existence. Instagram had just passed its second anniversary when Zuckerberg was looking to snap it up, making it Facebook’s largest acquisition in its history.
Instagram was created in October 2010 by two Stanford graduates, Kevin Systrom and Mike Krieger. The duo developed the app around an idea they called “Burbn,” which was a location-based check-in service. They launched the first version of Instagram on October 6, 2010 and by December of the same year, had one million registered users. Instagram quickly gained traction and by April 2012, when Zuckerberg purchased the company, it had grown to 30 million users and a $500 million valuation.
Purchase
Facebook and Instagram announced the acquisition on April 9, 2012. Facebook purchased the company for cash and stock worth an estimated $1 billion. Zuckerberg stated at the time of the announcement that the purchase was “big news” and that Facebook was “committed to building and growing Instagram independently.” The purchase was finalized on September 6, 2012.
At the time, the purchase of Instagram was met with some skepticism and criticism. Many were shocked that a company with only 13 employees and no real revenue model had been sold for such a large sum. Financial experts estimated that Instagram had a price-earnings ratio of roughly 2,500, making it one of the most expensive acquisitions in tech history. Others questioned the long-term sustainability of such a purchase, arguing that a platform with no real business model wasn’t likely to make a profit.
Growth
Following the acquisition, Instagram quickly grew in popularity, offering a range of new features and tools. By April 2017, Instagram had more than 700 million monthly active users, making it one of the most popular social networks in the world. It continues to be one of the most influential platforms in the digital world, with its users creating more than 50 million photos and videos every day.
Today, Instagram is one of the most valuable social networks in the world and has been estimated to be worth more than $100 billion. This makes it one of the most successful acquisitions in tech history and a testament to Mark Zuckerberg’s vision for the company. Indeed, the success of Instagram has helped to solidify Facebook’s position as a tech giant.
Exploring User Base
A closer look at Instagram’s user base reveals that it has a large, dedicated, and engaged audience. According to the Pew Research Center, the majority of Instagram users are between the ages of 18 and 29, followed by those between the ages of 30 and 49. Interestingly, recent studies have shown that Instagram is becoming increasingly popular among men, who now make up 43 percent of the social network’s user base. Additionally, Instagram is used more frequently by African-Americans, Asian-Americans, and Latinos than other social networks, making it an attractive platform for brands looking to reach diverse demographics.
Adoption by Celebrities and Brands
The rise of Instagram has coincided with a growing trend of celebrity and brand use of the platform. Celebrities and brands have increasingly been leveraging Instagram as a way to maintain a presence online, reach a larger audience than ever before, and interact with their fans. Over the past few years, celebrities such as Kim Kardashian, Selena Gomez, and Justin Bieber amassed hundreds of millions of followers, making them some of the most influential Instagram users in the world.
Likewise, brands have also been using Instagram as an important tool for marketing and sales. User-generated content, sponsored influencers, and sponsored posts have all become common ways for brands to engage with their target audiences on Instagram. This has led to a growing number of companies investing in Instagram advertising and creating stunning visual content that captivates users.
Benefits for Facebook
Since the acquisition of Instagram in 2012, Facebook has seen some great benefits, particularly in terms of user growth, market reach, and revenue. Instagram has been important to Facebook’s efforts to grow its user base, particularly among younger users. By 2020, Instagram has grown to over 1 billion monthly active users, making it one of the largest social networks in the world.
Instagram has also helped expand Facebook’s reach into new markets. In 2017, Instagram overtook social media giant Snapchat to become the second-most popular messaging and social media platform among U.S. teens. This growth has translated into increased revenue for Facebook, with Instagram accounting for more than a quarter of the company’s total ad revenues in 2020.
Conclusion
Despite the initial skepticism surrounding the purchase, Mark Zuckerberg’s gamble to purchase Instagram in 2012 has proven to be a successful one. Instagram has not only grown exponentially since its acquisition, but it has also become a major revenue driver for Facebook, providing an effective platform for brands to engage with their target audiences. In this way, Mark Zuckerberg has demonstrated his vision for the company and for Instagram, making it one of the most successful acquisitions in tech history.
