What Is The secret Of Instagram Business money?

How Instagram Makes Money

Facebook bought mobile photo-sharing app Instagram for around $1 billion in cash and stock in April 2012. At the time, Instagram was less than two years old and had no revenue. The deal was met with widespread mockery, including a segment on “The Daily Show.” But by December 2014, Citigroup analysts were saying that Instagram was worth $35 billion.

Instagram, Facebook and Advertising

Instagram makes its money from advertising, just like Facebook. Facebook doesn’t break out Instagram’s financials, but Facebook overall derived about 93% of its fourth-quarter revenue from ads. Ad revenue for the quarter was $3.59 billion, a 53% increase from the same quarter the year before.
A portion of that revenue almost certainly came from Instagram, which introduced paid advertising on its service in 2013. Since then, its advertisers have included Nike Inc. (NKE), General Electric (GE) and Walt Disney Co. (DIS).

The Inexorable Growth of Mobile

Instagram’s strength, and the main reason Facebook purchased it, is its devoted – and growing – mobile user base. Instagram reached 300 million users by the end of 2014. Facebook CEO Mark Zuckerberg has said the app is on its way to reaching 1 billion people.
When it bought Instagram, analysts criticized Facebook for having little presence on mobile phones. Recently, mobile has been a growing segment of Facebook’s advertising, accounting for 69% of ad revenues in the fourth quarter of 2014, up from 53% from the year ago quarter.

Advertising on Instagram is becoming increasingly sophisticated. A recently introduced feature allows advertisers to show slideshows and link to sites outside Instagram. Its new carousel ads “bring the potential of multi-page print campaigns to mobile phones – with the added benefit of taking people to a website to learn more,” according to Istagram’s business blog. Such ads, aimed at building brands rather than driving clicks, will be sold on a per-impression basis rather than a per-click-basis, Instagram’s global head of business and brand development told The Wall Street Journal.

Instagram Leverages Brand

That brand advertising has thus far eluded some Facebook’s biggest web competitors. The blog Stratechery has identified dependence on click-through ads and failure to build a business in brand advertising as one of Google’s biggest weaknesses. If Instagram can win a significant part of that market, it would become, as Zuckerberg predicts, a meaningful business in its own right.

“We get 20% of people's time on mobile phone in the US between Facebook and Instagram,” Facebook COO Sheryl Sandberg said on the third-quarter call. “We don't get close to that in terms of anyone's marketing spent.”
Facebook's financials suggest it is making progress toward that goal, which was the reason it bought Instagram in the first place.


source:
http://www.investopedia.com/articles/personal-finance/030915/how-instagram-makes-money.asp