Facebook increases its appeal to advertisers with Instagram acquisition

The analysis showed that the over half the visitors to Instagram’s website are under 35 while Facebook’s “reflects a more mainstream audience with a higher share of older users,” wrote Heater Dougherty, director of Experian Hitwise in the report.

By acquiring Instagram, Facebook adds a crowd of younger, early technology adopters to its now mature audience-base, commented John Merakovsky, managing director, Marketing Services Asia-Pacific. These users are also predominantly iPhone users as Instagram only launched its Android app on 4 April. Nevertheless, Instagram announced in the first few days after the launch that the app was being downloaded over a million times a day.

Merakovsky also pointed out that along with the platform, Facebook has acquired a more consumer data. “It is likely that FB will understand more about consumer behaviour, and how they interact online with others via image sharing. This new data set would be helpful to identify business opportunities when working with advertisers,” he commented.

Mark Little, principal analyst at Ovum observed that “the Facebook brand has also been slowly shifted by its wide popularity, with many parents and even grandparents of the younger users on the social network”. Facebook, he said, needs new attractions like Instagram to “regenerate network effects and to continue to pull the younger demographic into its orbit”.

Facebook’s acquisition of Instagram could also be instrumental in accelerating the social network’s move to mobile, noted Ken Mandel, managing director of Buddy Media Asia. “Facebook’s photo-sharing element has been lagging behind more focused and advanced photo-sharing applications, but with the acquisition of Instagram, Facebook has just broadened its appeal to advertisers, creating new opportunities that advertisers can leverage in terms of driving content that will engage and spur interactions between brands and consumers.”

Mandel added that many of Facebook’s 845 million users (as of Dec 2011) use the site primarily to share photos and, according to Comscore, spend 7.5 hours a month on the site. “The mobile side of the equation fits the big picture, given that about half of Facebook users are on their mobile phones and Asia Pacific accounts for half of the world’s mobile population with 2.9 billion mobile subscriptions, according to data from Mobile Marketing Association,” said Mandel.

James Hacking, vice-president of BlueCurrent Hong Kong agreed with Mandel that the appeal to advertisers was more about enhancing Facebook’s photo-sharing function and thus, enhancing Facebook as the “de-facto place for people to hang out online”.

“Through making its photo sharing capabilities better people will have less reason to leave Facebook and this presents advertisers with a captive audience that is less likely to go somewhere else.,” added Hacking.

Instagram has also had the foresight to translate its app into many Asian languages (simplified Chinese, Japanese Korean) – which explains why they’re getting hundreds of thousands of downloads of the Chinese app per day, said Merakovsky.

 Facebook, which is barred in China, plans to keep the Instagram brand a separate entity and may be able to use the app as a means of entering China, potentially leveraging its Chinese audience for advertisers.

A more seamless interface between Instagram and Facebook would also be appealing to advertisers, continued Merakovsky.  “Many retail brands have already leveraged Instagram and share photos of themselves, like Starbucks. Advertisers can adopt both platforms, providing more information about their campaigns on FB while sharing a nice, authentic photo with hashtags on Instagram to help increase message richness and brand visibility to appeal to various users.”

“The industry can expect synergies and integration between these two platforms. The combination of photo-sharing and mobile brings enormous opportunities, especially in the Asian region where both work so well together,” added Mandel.