Even more than Twitter now, Instagram has its users hooked, but it still doesn't mean much financially for Facebook. Still, there are some glimmers that sharing photos might be a big business. As far as engagement metrics go, Instagrammers visit the app more often during the day, and stay on longer, as these charts put together by AllThingsD's Mike Issac shows.
If running a business were a popularity contest we would say bravo to Facebook for snatching up this growing app. But a recurring theme in the discussions about Facebook's business prospects: having lots of users does not just turn into having lots of money. When Facebook bought the app, there were lots of theories about how Facebook could get dollars out of the photo-sharing site. But as of this August Instagram had run up $2.7 million in losses during its two-year existence, with CEO Kevin Systrom explaining that the company does not make any money.
Today, though, The Wall Street Journal's Katherine Rosman described some potential for turning the app into something more lucrative than the average social media craze. Buyers these days are responding better—i.e. buying more stuff—to "real-life pictures" from Instagram than professional photographed ads exactly because they don't feel like advertising. Rosman gives a couple examples: An iPhone photo of nail-polished nails got twice as many likes on TheFancy.com (a kind of Pinterest with more buying) as a professionally produced one. "Our customer doesn't want to be sold to all the time," Stacey Bendet, founder of clothing brand Alice and Olivia, told Rosman. "She is moved by the real thing." And brands are noticing this tendency and using more images that look like Instagram in their ads. Rebecca Minkoff published a print magazine ad (pictured above and to the right) made entirely up of Instagram photos. And, apparently it worked: "Shoe sales have spiked since the promotion," writes Rosman.
It's not clear if Facebook is making any money off these Instagram ad partnerships (Rosman writes they had to give "permission for use of its name, logo, and app layout" for a Taco Bell commercial, but it doesn't say if they got anything in return), but the link between social media and buying stuff is exactly what Facebook is trying to demonstrate to advertisers right now, even going so far as matching accounts with offline shopping habits at drug stores. There is some potential here. The social network just has to figure out how to charge for it, before the next Instagram comes along, stealing away all those valuable eyeballs.