The billion dollar deal of Facebook buying Instagram had made the headlines a couple of days back. Instagram, as its tagline says, is a free mobile application which enables fast beautiful photo sharing. The four reasons for a top networking site like Facebook buying a small start-up like Instagram could be the following:
Highly Competitive Mobile Market:
Facebook is trying to leverage the potential of mobile markets, a boom touted to be around the corner. Like every mobile app company, Instagram’s business model involves dishing out ads to its users, thereby making it viable. Further Instagram is innovating continuously and is available in most mobile platforms. This brings in positives like an increase in Instagrams’ users (and hence FB’s) and the requisite technology to make the existing FB mobile Apps better.
Better Pictures = More Likes = Happier FB users = More Users = More Data:
FB mobile photo sharing application is cumbersome to use whereas Instagram’s easy to use inbuilt filters aid in changing the dynamics of any photo, improving the quality of photos taken on mobiles and also ensure easy sharing on social networking sites like FB, twitter etc. Making Instagram available to FB users will enhance the quality of pictures posted by FB users ultimately resulting in increasing the reach of FB and growing its user base. The growth in the user base creates a wider scope for the revenue generation through the ad markets.
Cutting edge over competitors
The rapid growth in the users of Instagram implies that it is a start up with an exciting new technology waiting to be bought sooner or later. By being the first one to evince interest and by striking a deal with Instagram, FB has out-classed its competitors.
Retaining the Digitally Savvy Facebook User:
Digitally savvy users of social networking sites are rarely partial to any particular site. However Instagram has garnered over 30 million loyal users in merely 12 months. The robust Instagram technology has not only attracted tech savvy users but has also retained them. Acquiring Instagram gives FB an automatic access to a very digitally aware user base and also helps in improving the quality of the “personalized experience” offered by FB to such a user. This gives FB a better chance of building a digitally knowledgeable customer platform.
Summing up, the possibility of tapping the mobile ad market, improving the quality of the FB experience, adding a personalized touch to attract digitally intelligent users and being ahead of the competition seem to be plausible reasons for FB acquiring Instagram. The success of the acquisition can be seen only in the future.