Instagram Business Model and SWOT Analysis – How Does Instagram Make Money?


Instagram’s meteoric growth resembles a fairy tale from Silicon Valley, with the firm garnering enormous popularity in a couple of months.

Software developers created the social networking program for sharing photos and videos in under 8 weeks and released the ios version in October 2010. Facebook had projected cash and shares valued at about $1 billion for their subsidiary company within less than two years.

Debuting in Oct 2010, Instagram had attracted a user base of 25,000 people in a day. The app’s main goal was to showcase photos captured on mobile devices in its inception.

Company Profile

Company NameInstagram, Inc.
FoundersKevin Systrom
Key PeopleAdam Mosseri – CEO;  Justin Osofsky – Chief Operating Officer; Vishal Shah – VP of Product; Claudine Cazian – Head of Entertainment Partnerships, Kelsey Lee – Business Lead to the Chief Operating Officer, Listagram – Chief Passionate Officer
HeadquarterMenlo Park, California, San Francisco Bay Area
Company Revenue$24 billion
Key CompetitorsSnapchat, Triller, Twitter, Likee, Pinterest, Tumblr

What is Instagram? A Brief History

The Instagram application (IG) allows you to share photos and videos with your friends. It was created by Kevin Systrom, who started it in 2010.

Kevin, a 27-year-old Stanford alumnus of 2009, was operating at Nextstop, a firm that provided suggestions for where to go on vacation.

Previously, Kevin was employed as a corporate development associate at Google and worked as an intern at Odeo, a business that would eventually be developed as “Twitter”.

At Nextstop, Kevin learned how to program on the job even though he had no official expertise in computer programming.

After some time, he came up with a working prototype for a Burbn app, influenced by his love of excellent whiskey and bourbon.

Customers could check-in, publish their activities, and exchange images using the Burbn application. Despite the fact that location-based check-in applications were quite famous at the time, its photo-sharing function was a first of its kind.

How Does Instagram Work and What Does it Offer?

So how exactly does Instagram work?

If you have an iPhone or an Android device, you can use Instagram to share photos and videos with friends. Users may post photographs and videos to IG, which they can then publish with the people they follow or with a small group of friends they choose.

These leading social media users may now see, like, and comment on the photos from their pals. You can sign up for an account if you’re above thirteen by registering your username and email address.

Writing a caption: There is no doubt that captions are a smart option. Words, hashtags, or emojis may all be used to express yourself on social media. When leaving a remark, you have the option of “mentioning” other people by prefixing their username with a “@.”

Tagging people: Instagram’s “tagging” feature enables you to identify a specific person in a picture. The person you’ve tagged will be alerted through their newsfeed.

Placing your location: Adding location tags to your photos lets people recognize where you took them. Location tags may be clicked on to access the destination feed, whereas additional public postings can be seen by hitting those tags.

What does Instagram offer to its consumers?

The marketing strategy of Instagram has a significant benefit in that it provides access to a large and engaged audience that is eager to purchase from companies. Nevertheless, there are more advantages to using this social media network.

  • Advancement of the brand
  • Enhanced customer service
  • Increased revenues
  • Opportunities to increase the number of viewers

Getting to know your group and followers on the platform is easy because of the platform’s integrated insights.

Age, gender, geography, and the periods of day once your followers are most internet-savvy are just a few of the details you will discover about your followers using these Insights.

Finally, the company provides you with information on the return on investment you make on the network.

Instagram Business Model

Instagram’s business model is different and constantly growing. If you want to know why Instagram has over one billion users, here are some crucial points to keep in mind.

1. Customer-Focused Approach is The First Step

IG application has a number of simple-to-use features. It addresses three fundamental problems: taking stunning images, integrating them fast, and uploading and sharing them on multiple channels.

If you are a filmmaker or a fan of photography, this procedure will be helpful to you. Instagram’s ever-growing user base is primarily due to this.

2. Begin With The Fundamentals And Build On Them Over Time

In 2010, IG was first introduced as a social media platform to the public. When it first launched as a free photo-sharing app, this is how the company’s business model remained unchanged.

3. Establish A Community of Connections You Can Rely On

Instead of relying on third-party networks, Instagram built its own system. The rapid growth of the platform was the driving force for Facebook’s acquisition of the company.

Instagram Unique Selling Propositions

Having a unique selling point is essential to an organization’s growth. Instagram’s main selling point is applying a variety of filters to one’s photos.

A company’s app-building strategy and goals must be laid out in detail and know how to achieve with the app.

How Does Instagram Make Money?

Using Instagram is a blend of social media influencer and visual storytelling.

The company’s primary source of income is advertising. According to a recent report, Instagram is expected to pull in 40% of Facebook’s advertising income by 2021.

The cost-per-click of IG is $0.60 and $0.50 on IG feed ads and stories, respectively. Instagram feed advertisements have a cost-per-mile of $1.65, while Stories ads cost roughly $0.90.

The company published a blog post recently stating that more than 2 million marketers promote on the platform monthly. Here is a breakdown of how much money was made:

Story Ads

People and companies post ‘day moments’ on IG as slideshows, which disappear after 24 hours.


Users may upload their own videos to the IGTV platform based on user-based content. It’s pretty similar to TikTok and YouTube, but it occupies a separate market niche.

Similar to Youtube, this platform makes money from this platform by serving the advertising and paying content producers a portion of the income.

Carousel Ads

With carousel advertising, the viewer may see multiple images or videos inside the same ad by swiping left or right on the ad.

Video Ads

Like photos advertising, they are video formats that are square or landscape style that can last up to 2 minutes and have a button that tells people what they should do next.

Photo Ads

Call-to-action icons or promoted tagging are added to regular picture postings on the site to make them more appealing to advertisers.

Instagram Shopping Ads

Advertisements with tagged products that may be purchased on IG or other platforms are an outgrowth of the classic ad.

Instagram SWOT Analysis

The corporate can influence its strengths and weaknesses since they are internal elements that it can influence in SWOT analysis.

The business does not influence external variables such as threats and opportunities. When faced with opportunities or threats, the organization may respond appropriately. Let’s look at Instagram’s SWOT analysis as follows:


  • Instagram has over 800 million users, and you can engage many individuals in 30 languages.
  • Numerous people use this platform because it is one of the easiest ways to share photographs and videos across various platforms.
  • The application has seen almost 40 billion picture uploads.
  • Instagram is the most widely used platform for self-promotion by large brands, celebrities, and other influential people all over the globe.
  • With Facebook’s extensive network of professionals, the firm has expanded its reach and market share.
  • It is one of the earliest social media platforms devoted just to photographs and videos, demonstrating its pioneering spirit.
  • Filters function in IG allow users to personalize their images and make them stand out from the crowd.
  • Using hashtags is a great way to get your message out to a broad audience. A single hashtag can generate 12.6% more engagement than those without.


  • Privacy Concerns: Facebook has had to deal with a number of data security and privacy leaking concerns in the past. This makes individuals feel vulnerable, and they are now concerned about network security, considering that Facebook is Instagram’s parent business.
  • The Problem with Paid Promotions: The company cannot ensure that its visitors will exit the platform and access the advertiser’s web page for individuals and companies that pay for ads and marketing programs.


  • Product extensions may increase IG’s visibility.
  • Increased digital usage and the number of mobile phone users
  • Increased promotion and marketing may help spread the word about a product.
  • When it comes to Video Ads, the company could consider offering a built-in solution for small companies to create a minute short clip ad without using a third-party provider.
  • There are those who make a living solely from product marketing and sponsorships. This is an opportunity for the company to rise and shine.


  • Restricted Exposure: Ordinary individuals find it more challenging to get a following and visibility on Instagram, with over 800 million active monthly users. Only a few individuals are given the attention.
  • Inquiry into Self-esteem and Self-doubt: “Selfie culture” in social media seems to have sparked a boom in the number of young people, resulting in their flock to do cosmetic surgery.
  • Posted At The Scheduled Time: Numerous programs have emerged that enable users to schedule posts without logging into the system. There are fewer active users as a result of this change.