trending Market Intelligence /marketintelligence/en/news-insights/trending/byt6chM39ylHhIcA8LxYLw2 content esgSubNav
In This List

SXSW: Instagram founders recap on ads, authenticity with Facebook integration


Insight Weekly: Loan-to-deposit ratio rises; inventory turnovers ebb; miners add female leaders

Case Study

Central European Broadcaster Monetizes Content with a New Online Streaming Service


Debt Ceiling Debate: IR Teams Should Prepare for Potential Market Downturns

Case Study

Financial Data Provider Quickly Realizes Value of Upgraded Charting Solution

SXSW: Instagram founders recap on ads, authenticity with Facebook integration

Instagram Inc. founders Mike Krieger and Kevin Systrom in 2018 stepped down from the company to hand the platform to Facebook Inc., leaving one of the world's most popular social media platforms with hopes that it would retain its roots as an online venue for authenticity.

For years, the founders struggled to implement tools and features to monetize the app and enable users to monetize their own brands, walking a line between success and authenticity, the pair said during a March 11 SXSW keynote panel. South by Southwest, or SXSW, is an annual event in Austin, Texas that draws a range of media, technology and business executives to network and discuss cross-industry topics.

SNL Image

Social Media Apps

Source: Pexels

"We were the ones pushing monetization, not the other way around," Krieger said. It is a misconception that Facebook CEO Mark Zuckerberg pushed ad placement on the platform, he said. Generating profits for Facebook after its 2012 acquisition of Instagram is integral to the app's success as part of Facebook, Krieger said. As a result, the founders pushed hard on adding advertising to the platform, they said. "Instagram had to make money … so we would be a successful part of Facebook,” Systrom said.

Maintaining authenticity from user-generated content was a concern throughout the development and growth of Instagram, the founders said, balancing the market appeal of the platform with monetization opportunities. They developed the app's Stories feature after they noticed users posting more curated photos and fewer casual snapshots, providing an opportunity for a Snapchat-style interface to encourage sharing of more casual moments.

Krieger and Systrom also needed to make sure the feed was a comfortable space for its growing user base as more and more curated influencers joined the platform, turning it into a branding marketplace based on internet fame. How much they should "regulate" the influencer community was "one of the toughest decisions to make," Systrom said, as more and more casual users were drawn to the prospect of celebrity status and monetizing their feeds.

Promoting products was an inevitable outcome of the platform, the founders realized, which made optimizing for authenticity difficult. Adding features like Stories and creating an algorithmic feed allowed the company to reach a compromise, enabling them to work with influencers and marketers while also providing the casual Stories platform and surfacing content relevant to specific users.

However, with each of those platform changes came plenty of criticism, with tech columnists and high-profile users saying features like curated feeds, expanding the variety of photo formats, adding Stories and even launching an Android app "killed Instagram."

"We killed Instagram several times," Systrom said.

However, the platform's user growth has accelerated, going from about 150 million users when the company included ads in 2012 to over 1 billion in 2018. Systrom said that these controversial changes were key to staying relevant for the platform.

Many startups try to hold on to 100% of the features that made their products successful, and eventually those products fall out of relevancy as competition mounts, Systrom said. Instagram launched its Stories features as a competitive response to Snap Inc.'s growing user base after many users started to include Snapchat links in their Instagram bios.

The founders said they will closely watch the platform even though they no longer have influence over its evolution. Regarding Facebook's intention to integrate Facebook, Instagram and messaging platform WhatsApp Inc., Systrom said most of the integration will probably be on the messaging side of the apps, but he and Krieger were somewhat skeptical of the potential outcome. Growing the user pool on the chat apps might make the platforms more valuable, Systrom said. "I don't know, but bravo for making some big bets. We'll see how it goes."

Additional SXSW coverage:

SXSW: Media, entertainment, enterprise, health, policy, and AI to bind them all

SXSW: Instagram founders critical of sweeping antitrust regulation in tech

SXSW: 'Enormous' opportunity for bankers willing to embrace fintech

SXSW: Venture capital looking for targeted enterprise AI opportunities