Instagram has grown exceptionally fast for a new social network. Facebook, for example, took about five years to reach the 150 million user mark. Twitter announced earlier this year that it surpassed 200 million users, seven years after it first launched. Instagram is about three years old.
Facebook's acquisition of Instagram no doubt helped give it appeal to a broader audience. Sixty percent of Instagram users are now from outside the United States, the company said. Nick Dillon, senior device analyst at technology consultancy Ovum, said Instagram's speedy ascent is a sign of a mature marketplace.
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"When compared to Facebook and Twitter, Instagram had the advantage of launching into a more mature marketplace with a larger addressable market of smartphones and Internet services users," Dillon said. "While this means that Instagram was able to grow its user base much faster than Facebook and Twitter, it also means it's at risk of newer services growing even faster than it did."
In addition to its user milestone, Instagram also announced that it plans to run ads on the network within the next year. Instagram COO Emily White, who joined the photo-sharing site from Facebook, said that the company's challenge is figuring out how to integrate marketing without jeopardizing Instagram's cool factor. "We want to make money in the long term, but we don't have any short-term pressure," she told The Wall Street Journal.
Though many users will surely disapprove of the move, the addition of advertising shouldn't come as a surprise considering how engaged Instagram's top brands are. According to Nitogram50, a site that tracks the most popular accounts, 17 of the top brands have more than 1 million followers each.
Ovum's Dillon said that Facebook's experiences and lessons learned will be integral in how Instagram proceeds. "Instagram will need to strike the careful balance of creating value for advertisers while managing not to upset its users with irrelevant or excessive advertising," he said. "Having successfully rolled out advertising to its mobile users, Facebook will no doubt have some useful pointers for Instagram in this regard."
According to White, Instagram is aware that it could be capitalizing on these audiences and making hundreds of millions of dollars in advertising, but it's wary of making that leap. Users were outraged last year when Instagram made a change in the app's terms of service that implied that user content could be turned into ads. Facebook recently proposed similar changes to its policies, which sparked similar outrage among users and privacy groups.
While there is no data for when ads will hit Instagram, the company appears to be readying for their arrival. At a Facebook press event in June, Instagram co-founder and CEO Kevin Systrom announced Instagram's ability to make 15-second videos. In July, reports indicated that Facebook would soon introduce 15-second video ads to users' news feeds, which would reportedly sell for between $1 million and $2.5 million.