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Instagram Business Model : Working and Revenue Analysis of Instagram

Instagram Business Model : Working and Revenue Analysis of Instagram

Facebook can be on a lot of mouths but still, it is only Instagram which quenches my all-time photo sharing psyche. It is less likely that you are not aware of what it is all about. If it is so, then we would like to tell you Instagram is a photo and video-sharing website / mobile application which can be used for free by anyone. It is a Facebook acquired model now. Let’s look at what it used to be before.

History of Instagram

You will be amazed at the fact that this big affair got ready to use in just 2 months. It all started with the efforts of Stanford University graduate Kevin Systrom. He was working with Nextstop, previously worked with Google and Odeo, now known as Twitter.

In March 2010, Systrom went to a social meet-up at Hunch which was a startup situated in Silicon Valley. He met two investors there who viewed his model presentation and afterward decided to have further meetings regarding this. Meanwhile, Systrom decided to leave his workplace and in just a period of two weeks, he figured out how to bring $ 500,000 up from Baseline Ventures & Andreessen Horowitz. Instagram got launched on October 6, 2010, and went on a great velocity for becoming the best photo-sharing app.

Instagram Business Model

Instagram is based on a picture-sharing feature that has been seen expanding at a two-digit rate every year. Its inception was marked with an aim to become a portable picture-sharing application. Now, after some years it got indulged into some productive ways of monetization like sponsored posts, stories, and carousel ads.

Just like other social media sites, Instagram too strives at becoming an application for social interaction. It has got a number of amazing features like photographs/video uploading & sharing, geo tagging, stories, and more to serve the purpose.

Key partners: Facebook, Sequoia capital, Baseline, Greylock partner, Benchmark capital and Andreesen horowitz

Key Resources: Network, Platform, Technology, User base and Advertisers

Key Activities: Web development, Maintenance, App development, Maintaining user data

Value Propositions: The value propositions include some of the great features like Instant photo/video sharing, geotags, hashtags, filters, great photos API, an access to a big user base and more.

Channels: Website, Internet, App Stores and Developers APIs

Customer Relationship: Instagram account can be connected to other social media profiles, community and forums, business profiles and celebrity profiles.

Customer segment: Individuals and businesses

Cost structure: Platform development, server, data maintenance, marketing and customer service

Revenue streams: Advertisement majorly, Sponsored posts, stories and carousel ads

How Instagram works?

Instagram is purely a photo/video sharing which gets mainly operated through phone and having limited functionalities over the web. You can share your pictures/videos as feeds or as self vanishing stories. Instagram offers you a wide variety of amazing filters and editing options as well. You can set your profile as public or private based on your preference. People have to send you a follow request and you have to accept it in order to show your posts to them in case it is set on private mode. Instagram lets you like, comment and share the feeds with anyone in your list of friends. My personal favorite is the search section over which I get to see a lot of random pictures and videos relevant to my interests. You can get a variety of search results by performing a search here like people, tags, places and more.

Nowadays, it is also used by businesses to connect with their prospects. Instagram offers businesses an opportunity to advertise themselves in the form of photographs clubbed with nicely written text and proper usage of hashtags so that a good reach can be achieved. Along with Facebook, Twitter, LinkedIn and Pinterest, we are also seeing a high demand of Instagram marketing.

Depending upon your comfort, you can enable various kinds of push notification. You can decide whether to receive or not receive notification when someone likes or comments on your photo, when user mentions you, when your photo is posted on some other page or when you are tagged in a picture. Apart from this, Instagram also lets you perform other settings such as setting your password, managing search history, setting account private/public, switch to business account and more. There is much more to do with this amazing application. If you have never used it, there is a lot for you.

How Instagram Makes Money?


The major source of income for Instagram is Advertising, just like Facebook. The quality and commitment of Instagram was the reason why Facebook acquired it. In April 2017, Instagram had over 600 million dynamic clients day by day. 80% of the users are not from the USA.

Instagram’s blog says that “bring the capability of multi-page print battles to cell phones – with the additional advantage of taking individuals to a site to take in more.” We will see the promotion on Instagram advancing now with varied options for the advertisers. Right now, Instagram gets money by letting the users advertise their brand page, images and putting sponsored brand stories. Instagram has become one of the five major advertising websites for the business owners. Over the explore tab, some of the pictures are featured which serves as a great opportunity for business owners to promote their products/services through it.

Apart from being a highly engaging application for users, Instagram server a lot of opportunities for the new brands to connect with their prospects. Once marketed or advertised over Instagram, users can connect with the business owners through messaging or commenting. Stories have become another point of engagement for the users on which Instagram has also started showing the sponsored ones so that while users browse through various posts by people they follow, your story might catch their eyes.

Facebook’s Instagram generated around $ 8- $ 9 billion revenue in 2018 but it could definitely soar to $ 14 billion in the year 2019 according to fresh estimates.

Also Read: Whatsapp Business Model: How Does Whatsapp Work And Make Money?

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1 thought on “Instagram Business Model : Working and Revenue Analysis of Instagram

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    I have been reading out many of your stories and i can state pretty nice stuff. I will make sure to bookmark your site.


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