Ever since Facebook purchased Instagram Inc in 2012 for $1 billion, a mere four years ago, the question whether this deal made sense remained in the air. According to one of the major financial holdings company on Earth, it looks as if that question is settled. Not only did it make good sense, it might well make Instagram Facebook’s cash cow!
Analysts at Credit Suisse Group AG—the $800 billion plus Swiss corporation that emerged out of the 2008 economic crisis relatively unscathed—Facebook looks to be making back its investment this year and more. Projected ad revenues for the 2016 look to be well over $5 billion!
One reason for this is the increased integration of ads and videos. Facebook pioneered the logarithms which have replaced the old “reverse chronological” nature of personal feeds in favor of anticipating users’ interests. They are now slowly integrating the same kind of system for Instagram, which of course remains many times more image-oriented. Experts at Credit Suisse also believe t.v. commercials will begin to migrate onto social media platforms as well. More, the actual users of Instagram are overwhelmingly (roughly three quarters) outside the United States—a vital fact as international markets grow in importance.