On April 9, 2012, Mark Zuckerberg made an announcement that he bought a photo-sharing app, Instagram. His company, Facebook (now Meta Inc) paid $1 billion or £760m (combination of cash and company shares) at the time. It was a huge deal for the founders.
Founded on October 6, 2010, by Kevin Systrom and Mike Krieger, the platform has grown beyond the expectations of its original founders. Today, there are other great features like stories, reels, live video, and multi-image posting among others, making it a go-to for celebrities globally.
On why Facebook acquired Instagram, Zuckerberg in a statement revealed that:
“For years, we’ve focused on building the best experience for sharing photos with your friends and family. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”
His announcement surprised some investment analysts around the world why Zuckerberg could pay such a huge amount to acquire a platform that had not to generated any revenue at the time
While some people feared that it was a risk for him, the Facebook founder believed in his investment instinct. He was happy taking such a risk.
Did Zukerberg make the right buying decision?
Of course, yes!
To Zuckerberg, paying $1 billion to acquire the emerging photo-sharing platform was a price that would not stop him from developing other products, in case the investment doesn’t pay off.
It’s a risk that’s worth taking 10 years after. IG as it is popularly called has grown exponentially to be worth 100 times its value 10 years after.
In 2019, app tracker App Annie published a list of the most downloaded apps. Instagram occupied the fourth position, trailing behind its big brothers: Facebook, Facebook Messenger, and WhatsApp reported BBC.
At the time of publication, Instagram enjoys more than 1 billion downloads, suggesting how much power the platform has among its users.
In 2012, it had 30,000,000 users. A report published by backlinko back in January 2022 reported that Instagram had 500 million daily active users who access the app globally.
In terms of the market value of Instagram, a Bloomberg Intelligence report in 2020 revealed that the full-fledged social media platform raked in $20 billion in advertising revenue, that’s seven years after its acquisition. It generated $0 in 2012 before the sale.
According to the media company, Instagram was worth $100 billion by 2018. In terms of Return on Investment and value, it’s worth it.
Facebook now Meta Inc. isn’t the only company to have raked in mouth-watering value from its acquisition of promising platforms.
Google is also enjoying similar value and ROI over its acquisition of YouYube – original videos sharing platform – which it bought in October 9, 2006, for $1.65 billion.
Today, YouTube is said to be worth $330 billion, according to a 2021 market analysis by Seeking Alpha.
Its Impact on Content Creators
Instagram has not only become a prominent platform for marketing, content creators have also been impacted where thousands of them make millions of dollars for promotion.
For instance, a social media analytics firm Hopper reported in 2021 that football sensation Cristiano Ronaldo could make as much as $1,604,000 per post considering his large following, he has 424million Followers at the time of publication.
This is called influencer marketing and celebrities are cashing out from promotional posts on Instagram. Today, major advertisers around the world through videos sell and reach new leads on the platform.
Apart from revenue from Ads, Instagram and its owners have also had their share of criticisms. One of such was an allegation that Reels content creators are having their payouts slashed by 70 per cent, according to theverge
Regardless, IG has become a photo-sharing platform to beat when it comes to dominance as it continues to add more features that could sustain users’ loyalty.
Bought for $1 billion in 2012, worth more than $100 billion by 2022, I’ll leave the judgement of whether it was worth it for you.