April 12, 2012
I cannot take credit for the picture but I can take credit for the metaphor that I have attached to it.
I added the little Facebook/Instagram lock up.
Pop culture has it's camera.
Facebook just purchased a really expensive camera, a really really expensive camera, and rightly so.
The social nation exists because of the content that its citizens pour into it and when content is the lifeline of the network the network must then commit to providing those users with tools that will enhance the content they so rabidly share and ingest.
Facebook purchased Instagram for a whopping one billion dollars.
A company that has been in existence for 551 days and employs less than 15 people.
I ask myself, why couldn't Facebook, who already gets 8 billion photo uploads per month, simply build in a few fancy filters and emulate Instagram's functionality?
Doing so would have cost them no where near as much as they paid for Instagram.
Facebook understood the social and cultural relevance of what Instagram represented.
It wasn't simply an app that takes cool pictures but a lens in which its users look absolutely fabulous in but even more importantly a lens in which they endorse everything they love from a very intimate angle.
Polished user generated content.
Instagram makes no money, it's functionality is relatively simple and up until last week it relied completely on a single hardware platform.
So what gives? Why would Facebook take such a huge interest in Instagram?
Here is my take.
Facebook has been focusing on leveraging real posts as advertising.
People talking about brands and then brands sponsoring those stories to give them an extra boost through the network.
They are personal, they are authentic and they are engaging.
Now go to SearchInstagram.com and type in Nike you will be blown away with the creativity and awesomeness of a brand in the wild.
Brands are no longer the only one telling the story, consumers are now producers and they have their own story to tell around a brand.
Facebook understands this and I think that is why they purchased Instagram for such a whopping amount of money.
It is the fastest way to own a public storytelling machine, now apply Facebook's ad model of boosting user generated stories and there you have it the world's most powerful ad engine boosting consumer endorsed, personal stories and content that is as genuine as it gets.
Facebook understood that Instagram was being used as the vehicle for the public to not only consume and share what they so intimately love but to share it in context for how those products and services live within their private lives.
A billion dollars may have actually been a bargain.