Instagram can also be called a holy grail for most of you foodies, amateur photographers and jobless stalkers (read people like me) out there. However, it can also be called the reason behind Mark Zuckerberg’s smile nowadays, courtesy the business analysts over at CitiBank USA.
Way back in 2012, Zuckerberg brought the young team over at Instagram under his wing and watchful eye for a cool $1 Billion. If you feel this was just another one of Zuckerberg’s (seemingly) random purchases/takeovers, think again; CitiBank recently estimated the worth of the photograph sharing app at a whooping $35 Billion!! Now, whether you laugh off this valuation or whether you laugh at your worth (each legit user is estimated to be a certain worth), it is sure to get Mark laughing all the way to the bank.
While it is certainly one of the most popular apps across the major platforms (iOS, Android, Windows Phone), it also appears to be one of the highest valued apps in the market – if one considers CitiBank’s valuation. In fact, at $35 Billion, it even manages to surpass popular micro-blogging platform Twitter, which is currently valued around $23.5 Billion!
The valuation of Instagram, which previously rested at $19 Billion according to Citi themselves, has increased due to a two-pronged reason (two and a half according to me). These are as follows –
Audience / Outreach
Instagram being a visual mode of communication, it has started gaining users at a rate which can probably only be compared with the behemoth, FB, itself. Citigroup Analyst, Mark May, believes that Instagram is still in its growing stage and has tremendous scope. This can be visible from May’s statements like –
“Not only is Instagram’s audience now larger than Twitter, but its users are 1.8 times more engaged and user growth has been greater,” May wrote in a note to clients Friday, per Forbes. “Instagram is at the early stages of rolling out advertising, but we believe brands have and will find it an effective channel.”
Source: Charts from CitiGroup
Monetization / Ads
With their total user base crossing 300 million, Instagram has proven itself to be a dependable and stable app which is not just a sudden fad. A consequence of crossing this milestone is that marketing bigwigs are more likely to take to this platform to promote their products via Ads. As a result, a report from Forbes states that this new valuation has its basis in a forecast of 420 million active users by the end of 2015 – this results in an approx average of 12.6 feed views per day and an estimate of $1.48 in ad revenue per thousand views.
Legit outreach to the audience
Whilst Citi came out with such an enormous valuation, Instagram itself seemed determined to get rid of some users – not many, only around 18 odd million people. Now before you get worried that may have been one such deleted user, let me explain the above statement – Instagram was intent on weeding out fake profiles/spam accounts. Whilst this move have actually resulted in a loss of about 6% of their total users, it is a loss which Zuckerberg and co. will gladly accept – now, there are more chances of targeted ads being generated for and clicked by a genuine user.
It is this deadly combo (third point is my interpretation/analysis of the above two points) which has resulted in this stupendous boost of $16 Billion.
So, what are you waiting for ?!! Get started on your own billion dollar app NOW! Please leave your feedback / comments on this topic below.