"Instagram" is Now Worth 49 Times What Facebook Paid for it

Many Baulked When Facebook Head, Mark Zuckerberg, Agreed to Drop $1 Billion on "Instagram" in April 2012. "That's $33 per user", Said Some; "there's no business model !" Screamed Others. Less than 3 Years Later and Citigroup Now Says "Instagram" is Worth $35 Billion. That's Almost 49 Times Higher than the $715 Million Facebook Ended Up Paying after its Stock Price Fell and Considerably Higher than Rivals Twitter and LinkedIn. How did Things Go so Right ? The Short Answer is "Ads", as Would be Clear to Anyone Using "Instagram". The Long Answer ? First, the Valuation Hinges on "Instagram's" User Count Rising 40% over the Next Year, according to Citi Analyst, Mark May.


That's Likely -- it Rose by 50% between March and December of this Year Alone -- but, it's the 2nd Part of May's Calculations that's Up for Debate. The Analyst Believes "Instagram" will be Able to Monetize its Users Further and Rake in Much More Cash from Advertisers. But, What does that Mean for you ? It's been just Over a Year since "Instagram" 1st Introduced Advertising into its Apps but, May's Expectations of Higher Advertising Revenues Don't Necessarily Mean you'll See Loads More of Them. You're Worth More to "Instagram" than Ever Before -- More than $80 just for Being you, according to May's Calculations -- and it's Unlikely Facebook will Suddenly Flood your Feed with Irrelevant Ads.


Citi Thinks "Instagram" Can Get $1.48 from Ads per 1000 Views by the End of 2015. That's Less than Twitter Makes (Another Service Slowly Working Out How to Make Money) and May Argues that, "Instagram" has a Larger, Faster-Growing and More Engaged Audience. Simply Put: "Instagram" is a Better Fit for Prospective Advertisers. Instead of Filling Every Page with Ads, Facebook Leverages its Vast User Data to Argue it Can Target Sponsored Posts More Effectively than Others. The Company Uses your "Instagram" Favourites to Work Out What Kind of Ads you'll Respond Well to and also Takes Advantage of the Many Linked Facebook Accounts to Target Ads Based on your Profile, Likes and Interests. It's a Tough Ask: Balancing the Demands of Advertisers with a Historically Touchy Audience. So Far, "Instagram" has Done a Decent Job of it; you're Unlikely to See a Jetskiing Ad if you're a a 65-Year-Old Man, for instance. You're still Helping Drive the Company's Profits by Seeing Ads, of Course, but, you're Unlikely to be as Annoyed by them since they're (Mostly) Aimed at Stuff you Like.




Info Source:

http://www.cnbc.com/id/102284011