Facebook looks beyond Facebook for growth
Co. bets on Instagram, Messenger, WhatsApp
NEW YORK — When Facebook bought Instagram for $1 billion in 2012, it seemed like a big gamble for an unproven little app. Six years later, that little app — along with Messenger and WhatsApp — are serving as Facebook’s safety net for a future that could find its flagship service on the sidelines.
Sure, Facebook reigns in social media today, and this is not likely to change soon. Still, amid the company’s seemingly endless troubles over elections meddling, misinformation, privacy lapses, hacking and hate speech, the idea that Facebook may not always be on top has begun to take hold.
“Facebook could collapse,” said David Kirkpatrick, who wrote a 2010 book on Facebook’s early history.
In an interview, he said the elections manipulations issue “could get so terrifying that advertisers could start to back away. That’s nowhere near happening now, but it could happen.”
That is, as Facebook stops being a virtual watercooler for friendly conversation, but a lair for trolls and misinformation — advertisers might find the service too dangerous to showcase laundry detergent and shoes.
For now, Facebook is a social and advertising powerhouse. It has 2.23 billion users, a number that’s still growing at a healthy pace outside of the U.S.
Wall Street analysts project Facebook’s 2018 revenue will top $55 billion. While the company doesn’t break out revenue among its apps, eMarketer estimates that Instagram will bring in 16 percent of Facebook’s advertising revenue this year and 25 percent by 2020. (The research firm does not have estimates for Messenger ads, which are still new and nascent, and WhatsApp, which doesn’t have ads yet.)
“It really speaks to the fact that advertisers love Instagram,” eMarketer analyst Debra Aho Williamson said. “It has the appeal of being a generally positive environment.”
In fact, Instagram is becoming the top social media service for many brands to interact with consumers, said Yuval Ben-Itzhak, CEO of the social media marketing firm Socialbakers. So even though these companies are reaching a smaller audience than Facebook, these people are “engaging,” or interacting, a lot more with the advertisers, he said.
Instagram also attracting a younger audience.
A Pew Research Center study recently found that just over half of teens use Facebook, while 72 percent use Instagram.