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Facebook Buys Instagram To Solidify Position In Mobile and Social Media Space

  • Written by Alicia Fiorletta
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Social networking powerhouse Facebook announced that it acquired photo sharing app Instagram for $1 billion on April 9, 2012. The news was unveiled by Facebook CEO Mark Zuckerberg via a blog post on his personal page. The announcement came shortly following news that Facebook will be listing its shares with NASDAQ under the ticker FB once its IPO is finalized.

In the entry, Zuckerberg revealed that Instagram’s full team will join Facebook to create a strong, unified social presence.

“We believe these are different experiences that complement each other,” Zuckerberg explained. “But in order to do this well, we need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook.”

Zuckerberg reported that team members will continue to develop the app independently of the social networking site, and focus their energies on extending the app and brand to Facebook users. Although Instagram already integrates with Facebook, along with Twitter and foursquare, the companies will be able to work more closely to maximize the social photo sharing experience.

“For years, we've focused on building the best experience for sharing photos with your friends and family,” Zuckerberg added. “Now, we'll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people, based on your interests.”

 Zuckerberg also reported that Facebook will not change key features of the photo-sharing app, including the ability to share content with other social networks, as well as the option to not share photos with Facebook.

Facebook has continued to develop its menu of social products and offerings since filing for its IPO in March 2012. The social networking site’s acquisition of Instagram is a strategic move to extend into mobile and keep pace with competitors that offer more extensive solution suites, according to Brian Blau, Research Director of Consumer Technology and Markets for Gartner.

“In the end, Facebook wants to be a consumer platform company,” Blau told Retail TouchPoints. “However, the company has a limited number of products right now in comparison to other organizations, such as Apple, Google, Microsoft and Amazon. Facebook needs to expand its product portfolio, social networking offerings and services across geographies, cultures and demographics.”

Since uploading, sharing and tagging photos are the most popular behaviors on Facebook, Instagram is an ideal platform to enhance this experience, and make it a top selling point of the social networking site.

“Many people are asking how a company [such as Instagram] that has no distinct revenue model can be worth $1 billion,” Blau explained. “I think competition is a leading factor for this. Facebook bought a brand, an experience and a separate social network. Facebook also added core photography capabilities to something the site is known for and does quite well. Uploading and sharing photos is a core activity for Facebook users, so it seems like a natural fit.”

Instagram has solidified a loyal base of users and followers since its inception in 2010. Initially available in the iOS store for iPhone and iPod Touch, and touting a user base of more than 30 million members, the company furthered its expansion by entering the Google Android market on April 3, 2012. Since its release, more than 5 million Android subscribers have downloaded the app.

Time For Retailers To Hop On The Instagram Bandwagon
According to company statistics, Instagram currently holds more than 1 billion uploaded photos, with more than 5 million images being added daily. The Instagram app allows users to take photos of daily activities, meals, outfits and other items, apply filters, and share them with followers and peers that are members as well.

Since the platform also includes Facebook, Twitter and foursquare integration, users canshare photos with whatever social graphs and audiences they so desire. Featuring the ability to “Like” photos and tag users and trending topics using handles (@) and hash tags (#), Instagram utilizes many features similar to its social peers.

Many users are concerned with the acquisition, mainly due to Facebook’s photo sharing security standards. In an effort to alleviate negative sentiments, Kevin Systrom, CEO of Instagram, shared details on the business deal. 

“It’s important to be clear that Instagram is not going away,” Systrom reported in a blog post. “We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience. The Instagram app will still be the same one you know and love. You’ll still have all the same people you follow and that follow you. You’ll still be able to share to other social networks. And you’ll still have all the other features that make the app so fun and unique.”

Retailers such as Aldo and Forever 21 are using Instagram to post photos of new collections, roll out contests and share behind-the-scenes images. As Facebook and Instagram continue to synergize, sharing photographs via social media will become a viable asset to customer engagement strategies, especially among retailers building their presence across channels.

“The idea of providing photography and social sharing outside of the Facebook domain is a great appeal for retailers,” Blau said. “People love to take and share photographs; Instagram provides that instantaneously. New technology has allowed photography to be engrained in consumers’ daily lives, making it more important than ever for retailers to take notice and follow. Photography can communicate your location, activity and interests a lot more effectively. Retailers can take advantage of this because the Instagram workflow is so simple to use; it takes photographs and allows people to filter them and post them across several social platforms. Retailers should be excited about something like that.”

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