Facebook's $1 billion acquisition of photo sharing app Instagram has left more than a few scratching their heads, catapulting the mobile photo sharing app from the latest in a deluge of trends to an app of unparalleled and worldwide ubiquity.
In the ten days since its Android version was released, Instagram's usage has skyrocketed by an additional 10 million users. For those of you whose math skills aren't up to snuff, that's an increase of an average of 1 million unique users per day. Not too shabby. And if the figures didn't speak for themselves, the buy in of celebrities like Kim Kardashian—who recently surpassed the 1 million followers mark, in the aftermath of the acquisition—have helped spearhead its popularity.
In spite of its meteoric rise, some experts are questioning whether a valuation this high of a company that has yet to generate revenue signals an impending tech bubble. And if so, when will it burst?
I'd argue that the acquisition indicates a shifting of priorities; not necessarily rampant inflation or the foreshadowing of a tech collapse. Moving forward, mobile will be King. Facebook recognizes that and sees Instagram as a mechanism to impart its brand in a sphere where it's had minimal success.
Photo-sharing has always been one of Facebook's strengths, so why not integrate Instagram's success in the mobile arena into Facebook's repertoire? On principle, it makes sense. But it begs the question, is it really worth $1 billion?
Is the acquisition a signal of the boundless potential for mobile, or is the $100 billion valuation of Facebook's IPO burning a hole in Zuckerberg's pocket?
Undoubtedly, Facebook has a vision for capitalizing on Instagram's popularity. What exactly that vision is remains to be seen, but one thing is for sure: Instagram has a lot to celebrate right about now.
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