Instagram: Photo and Video Sharing for the Masses

Instagram was founded in San Francisco in 2010 by Kevin Systrom and Mike Krieger. They initially named their app Burbn and centered it around mobile check-in services. However, they soon realized it was too similar to Foursquare and decided to rename the app Instagram and focus on photo sharing.

Systrom closed a $500,000 seed round in March 2010 and posted the first Instagram photo — depicting South Beach Harbor — in July of that same year. In October 2010, the company released its iOS app through the Apple App Store.

By February 2011, Instagram had raised $7 million in Series A funding, raising the company’s total valuation to $20 million. It raised another $50 million a few months later with a $500 million valuation. 

An Android version of the Instagram app arrived in April 2012, and in less than a day, it had been downloaded more than 1 million times. 

Other significant events in the history of the company include:

• April 2012: Facebook acquired Instagram for about $1 billion in cash and stock. It said Instagram would remain independently managed.
• November 2012: Instagram launched website profiles, which allowed anyone to see users’ feeds with a web browser. The company also implemented web widget buttons linked to profiles, called badges.
• June 2015: Instagram updated its desktop user interface to more closely resemble its mobile interface, with more screen space for each photo and simpler graphics.
• Maq 2016: Company implemented additional design changes, including a black-and-white flat design theme and a more modern and colorful icon.
• September 2018: Krieger and Systrom announced they would be stepping down from their posts at the company. Shortly thereafter, Adam Mosseri was named the new head of Instagram.
• December 2019: Facebook announced it would implement fact-checking on Instagram to detect false information.
• March 2020: Instagram launched “Co-Watching,” a new feature that let users share posts with each other over video calls. The impetus for this feature was said to be increased demand for connecting with family and friends during the COVID-19 pandemic.
• August 2020: The company began to emphasize video more heavily with “Reels,” a feature that allowed video sharing and was aimed at Tik Tok. Another feature called Vertical Stories was also allegedly inspired by Tik Tok.
• October 2021: Facebook had its worst outage since 2008, which also affected Instagram and WhatsApp, another platform owned by Facebook.
• March 2022: Facebook CEO Mark Zuckerberg announces that Instagram planned to add non-fungible tokens (NFTs).

Like all social media platforms, Instagram makes money largely through advertising. It made about $47.6 billion in revenue in 2021.

When it comes to ads, the company has several advantages over many of its competitors. For example, Instagram users skew young. According to Piper Sandler Research, the platform has the highest usage rate among teens. It’s also teens’ second-favorite social media app after Snapchat, well above others like TikTok, Twitter, and Facebook.

Instagram is particularly good at creating immersive storefronts for selling things. Every month, some 130 million people click on shopping posts to learn more about a product. Relatedly, Instagram users follow businesses more than they do on many other social media platforms. The company says that 90% of its users follow at least one business, and 70% like or don’t mind ads when watching videos on the platform.

According to a digital marketing report from Merkle, Instagram is also strong in ad impressions. Impressions grew by an impressive 209% in the second quarter of 2018, while they declined by 17% on Facebook during the same period. 

One reason for Instagram's advertising success is Facebook’s decision to allow video capabilities on Instagram shortly after its acquisition. Instagram advertisers have a number of video-based creative tools at their disposal that can increase user engagement. 

One of the most important tools is carousel ads, which are lightweight video ads created from a series of still photos. This allows companies to create video content from other content they already have rather than paying someone to create it from scratch.

The fact that Instagram is primarily a visual, photo- and video-centric platform also gives it an advantage over other platforms for generating revenue. Visual ads tend to do better on mobile than text-based ads, and an increasing percentage of internet users (especially younger ones) primarily access social media on mobile devices while also using those devices to take photos and videos to share on Instagram.

According to Hootsuite, additional reasons that marketers are attracted to Instagram include:

• It’s the seventh most visited website in the world, with some 2.9 billion visits each month.
• It’s the ninth most-searched term on Google.
• It’s the fourth most-used social media platform overall, with about 1.5 billion daily active global users.
• 59% of adults use the platform for almost 30 minutes every day.

Facebook CEO Mark Zuckerberg has reportedly said that Instagram plans to double the amount of content that its algorithm recommends to individual users. The Daily Mail in the UK recently reported that, at present, 15% of the content that appears in a user’s feed is recommended. That percentage will increase to more than 30% by the end of 2023. 

Instagram says it suggests two different types of content: connected and unconnected. In a connected recommendation system like Instagram Home Feed, users explicitly define the sources of the content. The ranking system picks the best posts from these sources and ranks them based on factors like engagement, relevance, user interests, content quality, and freshness. 

In an unconnected recommendation system like Instagram Suggested Posts, sources are derived and ranked based on a user’s activity across Instagram, such as following and liking posts. 

According to Instagram, it wants its suggested content to replicate the feel of content that users have already chosen to follow. As the platform explains, “Scrolling through the End of Feed Recommendations should feel like scrolling down an extension of Instagram Home Feed.” 

If users are new to the platform or don’t have enough recent engagement for the algorithm to come up with relevant recommendations, it looks at the accounts the users have followed. If that isn’t enough to generate recommendations, it simply shows popular items and sees how a user responds. 

Instagram has been heavily criticized for these changes. However, aside from tweaking its algorithm, the company appears to be committed to suggested content for the foreseeable future. 

Other upcoming changes to Instagram are more in the realm of educated guesses. For example, Product > Lead, a user-generated content marketing platform, predicts that:

• Instagram will improve its analytic tools. Look ahead to see Instagram provide better analytics for both content creators and brands.
• The platform will make shopping entirely in-house. The platform may evolve into an ecommerce portal much like Amazon or Shopify, Product > Lead says. This would involve allowing users to purchase items within Instagram itself rather than going to a third-party website.
• IGTV will get new features. Instagram TV, which allows users to upload long-form videos, has a lot of untapped potential. There’s a good chance the company will add search functionality, channel subscriptions, and other enhancements.
• Marketers will become more attracted to micro-influencers. In 2023 and beyond, marketers will turn more and more to content creators with fewer than 10,000 followers, Product > Lead says. Such micro-influencers tend to have passionate followers, interact more, and generally develop deeper connections than celebrities with millions of followers. Moreover, it’s easier for marketers to tailor content to smaller groups.
• Fake followers will be found out. It’s become relatively simple for users to generate fake followers on Instagram. As a result, marketers increasingly won’t just look at the number of followers but will use various tools to evaluate whether they’re legitimate. Instagram itself is working on this problem as well.
• More companies will hire influencer specialists. These people will manage a company’s relationships with content creators on Instagram and other social media platforms, track social campaign results, host influencer events, and perform other tasks designed to maximize their employer’s benefits from social media.
• AR content will become more prominent. Facebook’s Spark AR Studio, which will soon be available on Instagram, will help users generate much more augmented reality (AR) content. For example, users will be able to try on apparel or change their hairstyle using just their Instagram camera. They will also be able to see who created a particular AR filter and follow them. For their part, businesses will use AR to extend their brand awareness.
• Gen Z will become more influential. All signs indicate that this age cohort will become more vocal on many platforms, but especially visual ones like Instagram, Product > Lead says. Businesses will have to build connections with this group if they want to thrive on social media.