Instagrams Financial Report

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Several people may be wondering “How does Instagram make money?” Well the answer to that would be like many social media sites where a lot of their revenues come from advertisement. In a recent article, Instagram was projected to make $700 million this year which would eventually grow to $5.8 billion by 2020. By comparing the usage rate between Instagram and Twitter, it’s clear to say that Instagram has really captured the majority of the market and benefits heavily through these advertisements.  Instagram is all about capturing as much users as possible which subsequently brings their acquisition value up. Some of the other sources that Instagram has interest in doing that will make them more profitable are monetizing their services, charging subscription fees, and selling photo products. These are all some low-risk options that have been suggested but not exactly incorporated into the business model. However, Instagram has really moved towards wanting to monetize their services in a way that would allow consumers (users) to get something in exchange for their photos being used for ads and other uses. Regardless of which option route that Instagrams decides to take their main priority is to make a decision in which consumers are not affected heavily and limit any possibilities of users moving their services elsewhere.

Reference: http://knowledge.wharton.upenn.edu/article/how-instagram-can-make-money-without-alienating-users/