The yellow brick road to monetisation: Exploring social media enhanced dating as an alternative route for Instagram

In April 2012 Facebook made headlines for agreeing to pay $1billion for Instagram, at the time the

price seemed excessive for a business with no obvious route to monetisation. Instagram’s operations were beautiful, personal and delicate. Aesthetically pleasing but difficult to scale successfully as the business gained more users. For Instagram, being acquired offered an opportunity to exploit Facebook’s economies of scale to successfully cope with growing demand. For Facebook, the acquisition offered an opportunity to capture a piece of the ‘photo-sharing market, which it had struggled to maintain a foothold in. Despite the synergies that this acquisition presented for both parties, the major differences in their respective (1) cultures (2) stakeholders expectations and (3)regard toward end-users, impacted how seamlessly these two businesses could integrate. With Facebook becoming the umbrella company, its way of doing business ultimately triumphed. The impact of this victory has been felt by Instagram users Worldwide - through the methods Facebook has monetised Instagram. The delicate balance most users and Instagram’s founders (Kevin Systrom and Mike Krieger) wanted hasn’t been found. Many users express their disillusionment with the platform’s direction, calling for simpler, less e-commerce like Instagram again. And so in this piece, we’ll consider an alternative reality, one where Instagram’s original and organically evolving aesthetic would be more influential in determining its route to monetisation.

A culture clash

Facebook had marketed itself as a business that seeks to ‘connect the world’ through its platform.

Using data analytics to learn the behaviours and preferences of its users, Facebook has sought to

create a ‘comfortable’ space that reinforced the ideals of its users, ensuring their retention.

Instagram however sought to cultivate new high-quality interests within its users. Interests that

would over time lead to a cult-like obsession with the product and have users recommending it to

others. Instagram’s culture was meticulous, detail-oriented and gradual. “Community first” - The

focus had always been on creating a product that users would fall in love with. In contrast, the

culture at Facebook was defined by a “religious obsession with growth”, the business was and is

famed for ‘moving fast and breaking things’, believing that ‘done is better than perfect, and

imitating the competition (to destroy them). These two cultures were at odds with one another. In

Sarah Frier’s book No Filter (which tells the inside story of Instagram) she recants how in the early

days of advertising on Instagram Kevin Systrom (former CEO and Co-founder) would personally

go through the proposed advertisements making sure that they aligned with Instagram’s aesthetics.

His attentiveness meant that Instagram users became accustomed to expecting low-disruption tools for monetisation. It was however impractical as the business scaled, and demand for advertising space grew.

Stakeholder expectations

At the time of Instagram’s acquisition, it had approximately 80 million users, 13 employees, 2 co-

founders and of course some investors. Facebook however had 1 billion users, approximately 4169 employees, a well-heeled management team, Mark Zuckerberg, Sheryl Sandberg and was about to

become a publicly held company. The ability to satisfy stakeholders expectations within their

respective businesses varied wildly. With Facebook becoming answerable to investors in the same

year it acquired Instagram, it dealt with pressure to justify its investment in the company. The

Instagram team had no experience with those kinds of stakeholder expectations. Its responsibility

had been only to its community (end-users), employees and relatively relaxed VC backers. This

allowed for two things to happen, (1) for the opinions of the employees to matter deeply and (2) for

the ‘community first’ element of its culture to flourish. Out of this was born the businesses USP.

Unfortunately, Instagram’s USP couldn’t thrive within an ‘at scale’ Facebook, shareholder

satisfaction mattered more. Enter stage right clunky monetisation tools

Thinking about the End Users

From the very early days of Instagram, the company cultivated communities, hosting mixer events

around the world so photography enthusiasts could gather and discuss the best techniques and share filters they created. Instagram leveraged these communities and the fact that its founding team was obsessed with its product to understand user pains and ensure users were pleased with what the business did to resolve issues. To put it simply Instagram listened to its users and enthusiasts from the very beginning. Facebook however viewed its users as products, data points to sell as market intelligence and also as eyes to advertised to. Getting users online, generating sales from them and extending their use time mattered more than addressing aesthetics pain points. This translated into a quick, highly adaptive and generally successful approach to product development. Facebook hasn’t been afraid to take risks and try new tools to grow and maintain its user base. An admirable quality that has served the business well but also alienated users, nowhere has this more obvious than in Facebook’s most recent efforts to monetise Instagram.

Timeline of Instagram’s road to monetisation

To understand the impact here is a timeline of Instagram’s road to monetisation…

December 2012 - Instagram changed its terms and conditions to allow itself to sell any user’s post

content to third parties without consent or notification.

November 2013 - Introduction of sponsored posts, Instagram makes its first foray into advertising

and opened up the possibility of influencer marketing.

August 2014 - Instagram begins to offer business tools for analytics.June 2015 - Instagram introduces new advertising capabilities allowing businesses to prompt users to install apps, sign up for email newsletters and go to their websites. Links are now visible in bios.

September 2015 - Businesses are allowed to run 30-second video ads.

February 2016 - Instagram introduces the capabilities to switch between business and personal

accounts seamlessly.

May 2016 - Instagram adds new business tools to enable brands to better understand how their

content performed. (I.e. demographics, post impressions and reach)

January 2020 - Business accounts were given a new inbox tab allowing them to switch between

‘primary’ and ‘general’.

April 2020 - Instagram begins to allow the sale of gift cards, food orders and donation tools for

businesses.

May 2020 - the ‘shops feature’ allowing businesses to build out fully-featured e-commerce stores on the platform is released. Users are also allowed to monetise IGTV.

September 2020 - ‘live shopping’ is introduced to the platform, allowing influencers to talk about a

product whilst said product would appear at the bottom of the screen (via a prompt).

April 2021 - Adam Mosseri announces that the platform is evolving to “help creators make a living

over the long run” and will launch Creator Shops, affiliate commerce (i.e. commission payments for

product sales) and a new “branded content marketplace” to connect influencers and brands.

In June 2021 Adam Mosseri (head of Instagram) said “We’re no longer a photo-sharing app or a

square photo-sharing app”. It seems like Instagram’s current road to monetisation means that it will

be more like TikTok than the Instagram of old. The case for pivoting towards the TikTok and

creator economy model isn’t hard to see, TikTok according to Sensor Tower has surpassed 3 billiontotal downloads globally. Whilst Facebook having approximately 2.89 billion active users according to Statistia and Instagram having 1.074 billion active users according to Oberlo. In the knowledge of this Facebook Inc choosing to pivot towards the TikTok model to grow and retain its user base can be understood. The creator economy is valued at an estimated $104.2 billion and is likely to have a trillion-dollar valuation in the future, to date most creators have favoured Instagram but there is always the possibility that this could change if Instagram doesn’t play to it. Hence Instagram playing to it. Despite all of this, users are expressing their dissatisfaction with these changes, these features are being thrown at them too quickly, they don’t fit into Instagram’s beloved identity. So what changes, if any do?

Online dating

The global online dating market was worth $2.230 billion at the end of 2019 and is expected to be

worth $3.592 billion by the end of 2025 with a CAGR (compound annual growth rate) of 8.26%

(according to Valuates Report). Though nowhere comparable to the opportunity offered by the

creator economy, online dating could act as a natural medium-term revenue generator for Instagram. In 2017 The New York Times published an article professing “Instagram is now a Dating Platform too”, it discussed how profiles doubled as extended dating portfolios, ‘thirst traps’ seduced potential lovers and direct messaging opened the doors up to a chamber of possibilities. It would not take much for Instagram to tailor these features to suit the aims of its single users. It is key to note that Facebook (Instagram’s parent company) has developed its dating feature, which launched in October 2020 (with a very low profile) has received lukewarm reviews online, though a “pleasant,

user-friendly experience. (being) easy and intuitive service.” “The biggest bad with Facebook

dating has very little to do with the service itself. It’s to do with the people who use it”.

What Instagram has over Facebook when it comes to dating

As mentioned earlier in this piece Facebook has built and retained its user base by feeding them

more of what they know and what they like. Leading to most Facebook users existing within an

echo chamber, in which their opinions are affirmed by those they interact with. The difference is not

embraced, being militant in your beliefs is celebrated. A key component of the Facebook dating

service is that it promises to not match you to anyone that you are friends with. Given that the

Facebook algorithm exposes you to people that hold similar views to you, there is a strong

likelihood that there could be polarity in the matches, I.e. either a perfect match or a terrible match.

The polarity that is encouraged and embraced on Facebook does not exist explicitly within

Instagram. Instagram lends itself to social peacocking on insta stories and in posts, the user experience/interactions are less insular, users (whether rightly or wrongly) enjoy showcasing and managing their public lives in a palatable way. Not too dissimilar from how people behave on

dating sites, to begin with. Many users already use Instagram as an ad-hoc dating service and could

potentially appreciate a discrete tool to aid with this.

Instagram also appeals to a younger demographic than Facebook which has been experiencing a

decline in younger users, in the 2018 Infinite Dial report showed that 29% of 12-34-year-olds

ranked Facebook as their most used social media platform, compared to 58% in 2018. Whereas

according to Statistia approximately 60% of Instagram users fall into that demographic.

Instagram also has advantages over the well-established incumbents within the dating market when

considering Millennials and Gen Z users. Though dating apps are popular amongst these

demographics (with 30% of them admitting to using them), they often do not take the platforms

seriously, instead of viewing it as a tool for “confidence-building procrastination” and instant sexual

gratification. Instagram has the potential to break this pattern offering a ‘slower’ dating experience/

product in which its users could be offered the potential to temporarily follow their potential

matches to learn about them. There are already several young dating platforms competing to own

the more conscientious social dating space. According to CrunchBase at least 50 social dating

companies launched between 2019 - 2021. Startups like; Lolly and Snack which use short

(informed) video to help users find potential matches, Feels which market itself as an ‘anti-dating

app’ and So-Synched which matches people on Myers-Briggs personality tests. Instagram could

repurpose many of its pre-existing features to compete and beat these new players at scale. By using data analytics it gathers about user behaviour to find a more genuine match, its dm, insta story and stigma-free reputation could quite easily cultivate an incredible product. Much of the feedback on the Facebook Dating product interface and features have been positive and so could also be adapted for Instagram.

The introduction of an online dating feature could offer Instagram the opportunity to explore

‘optional’ ad on capabilities within the app. It’s often said that despite the simplicity of the iPhone

operating system, no two people use it in the same way. Users are at the point of every update

offered the chance to delete features that they do not want to use, Instagram adapting that capability to its app could allow for not only the seamless introduction of online dating but also for users to embrace features and developments at their own pace. The early adopters of features like the Creator Shop could become collaborators in the way those within the early Instagram communities were. Ensuring that users develop that once famed ‘attachment’ to Instagram again.

Today Instagram does an outstanding job communicating the changes it wants to introduce. It

observes how the social media landscape is changing and continues to adapt to survive but to truly

flourish and make its way down the beautiful yellow brick road to monetisation with all of its users

in the toe it must learn to listen and stop trying to be all things to all people at the same time.

Sources:

No Filter: The Inside story of how Instagram transformed business, celebrity and our culture - by

Sarah Frier

Instagram Is Now a Dating Platform, Too. Here’s How It Works.

Online Dating Market Size

Zooming In: The Creator Economy Growth in 2021

TikTok becomes the first non-Facebook owned app to Reach 3 Billion installs

Facebook is testing drastic changes to Instagram to make it more like TikTok

Instagram announces new features for creators to make money

The complete timeline of Instagram updates that have changed the way we gram

Distribution of Instagram users

The role of social media in dating trends amongst Gen Z college students