Facebook Acquires Instagram: For A Price Too High?
Yesterday, Mark Zuckerberg announced an agreement to acquire Instagram for one billion dollars - you read that right - imagine our best Austin Powers voice here, pinky finger curled next to our lip…”one BILLION dollars”…
Elevator and breakroom talk here at Merkle Connect had one resounding theme: why so much?
Is Facebook flying blind in trying to drive value before its IPO?
We doubt it. We believe it’s a combination of a few things.
Mobile Engagement = Ad Revenue: According to a recent Nielsen report, 44% of mobile users own a smartphone. Not just that, 29% of smartphone users utilize their phone for commerce activities. This is a ploy for ad revenue because of that pay-to-play space.
Visual Appeal: Pinterest is huge right now, with more referral traffic than any other network aside from the Facebook giant itself. Zuckerberg’s force to Timeline, in hindsight, is a visually stimulating atmosphere that goes so far as to thread content not able to engage users at a visual level. The company is smart for realizing where the market is going and this acquisition will capitalize on that popularity.
Data Capture: We know that Facebook has an aggregate of data the likes of which no company has ever seen (maybe not even the federal government), and the ability to segment uploads by interest category (a la Pinterest) will drive even more information capture.
It remains to be seen whether the company can drive revenue out of the acquisition or whether it was just a ploy to pick off a potential competitor. At the end of the day, one of our own Merkle employees might’ve put it best – “…Photoshop filters. They paid one billion dollars for Photoshop filters.”