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Instagram Hits 150 Million Users, Plans Ads

Social media users rarely cheer ads in their feeds, but Instagram may be able to learn lessons from parent Facebook's successes and failures.

10 Facebook Features To Help You Get Ahead
10 Facebook Features To Help You Get Ahead
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When Facebook acquired Instagram in April 2012 for $1 billion, loyal users cried that the social network would ruin the new photo-sharing app. But apparently that wasn't the case: Instagram announced Sunday that it has grown to 150 million users. That's 50 million new users in the last six months and 128 million new users since being acquired, the company reported.

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.

[ Do you know what to look for? Read more: How To Spot A Facebook Scam. ]

"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.

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Cara Latham
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Cara Latham,
User Rank: Apprentice
9/10/2013 | 3:08:59 PM
re: Instagram Hits 150 Million Users, Plans Ads
I guess it is the way of social business now, but every time I read about a social media company hitting a milestone, it is always followed by the announcement that there will either be ads implemented. At the same time, I understand the need to make money. Let's hope Instagram really did learn from the Facebook lessons about how to balance profitability with a good user experience.
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