What's the business model of Instagram?

If you can spread the same wildfire, then why do the immediate interests care, and to extinguish their own flames? Facebook is looking to wait for Web sites and mobile apps to grow, and then make money with ads. Now Instagram the same strategy. When Wall Street said that Facebook could earn more than $700 million by using the photo, Mark Zuckerberg refused to give up the chance to make a lot of money tomorrow because of the small profits of today.

Facebook took a long time to take advertising seriously. From its first day on, it has been trying to grow users and put the user experience first. Facebook's first ad is actually a "flyer" for campus activity, which coincides with the value of social networking. When Facebook starts selling more and more traditional ads, they sell only a small number of places, such as the sidebar, which does not affect the overall layout of the page. Facebook is like a Xanadu in comparison to other Web pages of fancy advertising banners and window ads. This sensible strategy has helped it grow rapidly to millions of users in a short period of time.

In July 2008, Facebook launched its IPhone app. For more than three years, no ads have been placed. Over the past 2010-2011 years, Facebook has grown alarmingly at the mobile end and has become the most popular mobile app. If the ads were to be imposed at that time, there would probably not be such a rapid momentum of development.

At the end of 2011, Facebook had more than 57 million active users on two platforms, IOS and Android. Such an astonishing growth rate may be related to their reliance on HTML5 technology, but more importantly, they are not wasting their limited resources on advertisers.

At the beginning of 2012, Facebook finally announced that it would display ads on mobile terminals and computers. But at the time, Facebook was growing at a slower pace in developed countries such as the US, Canada and Britain, and basically everyone was using Facebook. Facebook's user growth comes mainly from developing countries.

Facebook has little to lose when it finally puts ads on Web pages, IOS and Android. It no longer requires a viral spread, just make sure people don't get away from it. The ads began to appear, just as Facebook initially predicted, and the user did not give up because of the presence of a bit of advertising.

The story is over and the strategy continues. There is no doubt that Facebook can get more benefits by monetization of its products ahead of time. But when it loses millions of of dollars for the benefit of its users, it can make money back in a more covert way. Even so, when Facebook announced this week's financial report that it had no plans to advertise on photo apps, it would still be a bit of a surprise.

This is not because of lack of demand, Zuckerberg said:

"Instagram, they really do well and grow fast. I think we are right to focus on it. They have the opportunity to get users and build this huge community, and I think it's time to focus on this 100%. I'm also very optimistic about business opportunities. There are already a lot of Facebook advertisers and we have agreed to settle in Instagram. People are constantly asking us how to become richer, and that's what we're thinking. But now, I think, I am proud of the Instagram team and excited about their growth. They are growing so fast, even faster than Facebook reached 1 million users. “

Maybe when Facebook gives Instagram enough time to develop and figure out what form to advertise on the latter, we can see Instagram monetization. Instagram currently has a number of options:

Instagram can display ads while users are browsing messages, but may try to avoid users jumping to other sites because they click on ads. Therefore, I think Instagram should be to promote the enterprise account, so that it can get more fans of the way, so that users only jump in the application.

Companies should also be able to send pictures to people who don't care about their corporate accounts. and corporate account fans of friends are the goal of the enterprise. There are other ways, such as helping advertisers enhance their existing photo-circle capabilities. For example, if I circled Nike in the photos I uploaded, Nike would probably pay for the picture I uploaded on my friend's page, or show it again after one weeks.

Instagram can also try to promote accounts and recommend some brand names to people, just like Twitter and Sina Weibo. At the same time, recommending other apps for downloading to users has become a new way for Facebook to make money and should do the same on Instagram.

Facebook and Instagram can follow this "development > advertising" strategy because they are thinking about the longer term. Facebook is confident of its development in the next few years and believes it can take advantage in the industry. Great user base and network effect bring them confidence. But it's always a gamble. What they have to worry about is that when the Instagram begins to advertise, there will be no new applications to be born and the user's attention should be diverted. It's like walking on a tightrope, but it leads to a healthy community, a quality user experience, and a sustainable business model.