How Facebook Turned Instagram Into a $5 Billion Business
Facebook doesn’t talk about the money it makes from its photo-sharing app Instagram. But that hasn’t stopped others from talking about it, or at least speculating about it.
The most recent of those speculations comes from analyst firm MoffettNathanson, whichpredicted Friday that Instagram will bring in $600 million in revenue over the next year, with that number expected to jump up to $1.8 billion in the next two or three years. Eventually, when Instagram is “mature,” it will be a $5 billion per year business. (Many would argue that number is low, and even MoffettNathanson believes it’s on the conservative side; under the right conditions, it thinks Instagram could rake in as much as $11 billion per year.)
Lots of people are high on Instagram, which has more users than Twitter and is just now getting the kind of ad targeting that drives marketers to Facebook day in and day out. Facebook has been purposely slow to ramp up Instagram’s advertising efforts, and some of the hype right now is because of its new 30-second autoplay video ads, which some believe could pull in money from traditional TV ad budgets. (Facebook has been trying to make that steal for years.)
And whether Instagram grows to $5 billion, $11 billion or somewhere in between, Facebook looks like it already got a steal when it snatched up Instagram for just $1 billion back in 2012.