Instagram: On the Road to Monetization

By Amy Vale

In December, Instagram announced its new Terms of Service to the public, which have since gone into effect as of January 16, 2013.  According to these new terms, “you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.” Needless to say, these new “terms” set users off into a frenzy of anger, frustration, and confusion. In response, the Facebook-owned photo sharing app has since confirmed its reasons behind these very confusing Terms of Service.

Instagram isn’t just a fan favorite with everyday Joes and Janes; it’s become heavily adopted by major celebrities such as Ashton Kutcher and Kim Kardashian. But thus far, there hasn’t been any real way for the app to generate revenue. So let’s talk about a few ways Instagram can monetize while not disturbing the experience that millions of users have come to love.

Follow in Facebook’s Footsteps with Sponsored Photos
A lot of the panic and outcry began in December when Instagram first announced its new Terms of Service.  Many people were appalled at the idea that Instagram, the favorite photo sharing app with 90 million daily active users, would sell their very personal photos to brands. But, it turns out that’s not the case; Instagram is taking its cue from Facebook’s “sponsored post” revenue model. Basically, advertisers can pay to “sponsor” your posts in many categories so they appear prominently in friends’ News Feeds. It’ll be interesting to see how Instagram leverages targeting capabilities so that Sponsored Photos feel more relevant and enhance the overall user experience. By using sponsored photos and forming strategic partnerships with multinational brands, Instagram will be able to do what Facebook and Twitter have already been doing for months now – generate a consistent stream of revenue.

Pay For Premium Filters
One of the most popular features of Instagram is the ability to take a photo and then apply filters to the image, giving it a different vibe than your average phone photo. While the filters are fun, the twenty options currently available aren’t all that different from each other. Adding in premium filters that could be purchased in-app would allow users to set themselves apart from their friends. A Pew Research Survey in September 2012 found that while 12% of online adults use Instagram, 27% of those online adults between 18-29 use the photo sharing app. These are also the type of users who would be more comfortable and inclined to spend $1 or $2 within the app to purchase unique new features.

Get Physical with Photo Prints
GeekSugar recently ran a post advising users which companies can print Instagram photos. Instead of driving users and their money into the arms of others, Facebook may want to consider setting up their own in-app print option. It would have to be competitive in price with the already-established printing options, but offering it through Instagram makes it much faster and easier for the app’s millions of loyal users. Instagrammers, as they’re often called (by themselves), can choose their favorite photos, enter their payment information, and review their order all directly from within the app itself. Because users care about a simple user experience when it comes to in-app purchases, combining the digital with the physical elements of the overall photo sharing experience will help Instagram extend its brand across multiple channels.