Sunday Times

Face­book’s com­mer­cial im­per­a­tive threat­ens to photo-bomb In­sta­gram

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Mark Zucker­berg is start­ing to suck Face­book’s epony­mous prod­uct dry as far as rapid growth is con­cerned. Next tar­get: In­sta­gram. That might ex­plain the de­par­ture of In­sta­gram co­founders Kevin Sys­trom and Mike Krieger.

Six years af­ter Zucker­berg ac­quired their then 13-per­son start-up for $715m (about R10bn now), the photo-shar­ing app has be­come Face­book’s most im­por­tant source of growth.

Zucker­berg has sub­se­quently as­sumed a more hands-on role, which be­came a source of ten­sion.

In re­cent earn­ings calls, Face­book has em­pha­sised its in­tent to se­cure more ad dol­lars from In­sta­gram.

That’s good news for in­vestors, but it also poses a risk to the very foun­da­tion on which Sys­trom and Krieger built their suc­cess.

Peo­ple are drift­ing away from Face­book in part be­cause the qual­ity of its con­tent has de­clined.

That’s not just down to too many users flood­ing the place, but also be­cause much of the re­cent growth in ad rev­enue has come from small and medium-sized en­ter­prises.

As those com­pa­nies pile in, they’ve stuffed the news­feeds with spam­mier con­tent.

Now Face­book wants to do some­thing sim­i­lar with In­sta­gram, which it has been slower to milk for rev­enue.

Its early cor­po­rate users tended to be big brands or smart start-ups with strong mar­ket­ing savvy, mean­ing that the qual­ity of ads was rel­a­tively high. Yet Face­book has launched re­cent ini­tia­tives en­cour­ag­ing SMEs to place ads in In­sta­gram Sto­ries, its an­swer to Snapchat.

That’s a tricky path to tread. If In­sta­gram too be­comes chock-full of trashy ads, the user ex­pe­ri­ence could suf­fer and peo­ple will move else­where again.

It’s a co­nun­drum at the heart of Face­book’s busi­ness. It needs more ad­ver­tis­ers to con­tinue grow­ing. But be­cause of Face­book’s de­pen­dence on au­toma­tion, the more ads you get, the spot­tier qual­ity be­comes — and the greater the like­li­hood of alien­at­ing users.

Should In­sta­gram ex­pe­ri­ence such a slow­down, then What­sApp is the next great hope for rev­enue growth.

So far, only ten­ta­tive steps to squeeze ex­tra money from the mes­sag­ing app have been taken in places like In­dia.

But its founder, Jan Koum, a staunch de­fender of user pri­vacy, also left in April, hint­ing at greater pres­sure from Face­book.

What­sApp has been build­ing a team of data sci­en­tists over the past year, sug­gest­ing that it too is ex­plor­ing ways to ex­ploit user data to gen­er­ate sales.

In­sta­gram has some in­her­ent ad­van­tages over Face­book as far as con­tent is con­cerned. It’s harder to re-share con­tent from oth­ers, and it’s not a fo­rum for de­bate in the way Face­book is, mean­ing that it’s not as po­lar­is­ing.

Yet Zucker­berg’s Face­book has to make sure that it doesn’t be­come akin to a swarm of lo­custs, mov­ing from plat­form to plat­form and turn­ing each one to a husk.

Zucker­berg’s Face­book has to make sure it doesn’t be­come akin to a swarm of lo­custs

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