Instagram Business Model_How Instagram Makes Money

Instagram Business Model_How Instagram Makes Money


 Instagram is a very popular social media app right now and Instagram also introducing new features and making the app more interesting. Sometimes it may bother you how Instagram makes money so this article is for you. In this post, we will try to explain Instagram's business model and reveal the ways of how Instagram makes money.

Instagram is a famous social media platform that allows you to share photos, upload your stories, and now you can even share the reels(short videos).

Instagram comes in 2010 and now it is one of the most popular social media apps right now with large numbers of active users and according to stats Instagram had  1 billion users in 2018 and after introducing reels the users are increasing. 

Instagram has launched their stories in 2016 and in one year it gave tough competition to the most popular social media app Snapchat, and it just outsources Snapchat in terms of users.

Instagram just introduced their reels feature in India and as the Indian government banned the most popular short video platform Tik-Tok, the users shifts to Instagram. According to statista, maximum users of Instagram are from united states, India, and Brazil.

Instagram Business Model, How Instagram earns money


As Instagram was being popular so facebook bought this in 2012 and from that time it has seen exponential growth on this social media handle.  let's talk about how Instagram makes money and how it becomes a money-making machine for Facebook.

Each app can generate revenues in a lot of ways from promoting brands to showing ads but how exactly Instagram makes money we will uncover that in this article.

In 2013 there was specially launched Instagram marketing solutions and after that, the app is just unstoppable, the revenue for them just started going high and touch the number in billions. And after that in every two years, their income just going double and they are still increasing.

But the question is what are the particular ways of Instagram of making money, let's uncover and discuss them.

1. Advertisement-

  The advertisement is the major source of income for Instagram as they provide different types of advertising. According to stats, Instagram generates 20$ billion from advertisements.

According to Hootsuite, You can see Instagram Advertising Audience Overview  that shows the potential number of people that marketers can reach using adverts on Istagram.

Source- Hootsuite

People are love to advertise their products, and services on Instagram as they provide different types of ads, and show preferable ads to the audience according to their interest. The advertising ways of Instagram are discussed below...

► Ads with pictures-

Instagram allows us to create beautiful photo ads with a clean, simple, and beautiful canvas. You can select photos in square or landscape format, that how it easy is. They charge users for these ads. You can also add an action like a call now or give a link to your site.

► Video ads-

The major population now prefers to watch video content as they are more informative. Instagram allows us to create the best video ads according to you, you can create a user-friendly video and advertise on Instagram.

► Dynamic ads-

Sometimes you want to add multiple media then Instagram just covered your back. With dynamic ads, you can use multiple photos or videos and fully express your business.

► Story ads-

The stories on Instagram are really popular, and lots of users put their stories. You can also set your ads on Instagram with stories and the stories are well placed and the ads will be reached to an interested audience.

► Ads in the explore tab-

The explore tab shows content according to your interests and you can also show your ads in Instagram's Explore tab.

2.Selling user database-

Yes, this may be true that Instagram is selling user database and it also expressed this into their terms and conditions.

To understand more let's understand How Instagram works?

Working of Instagram-

Instagram is a photo-sharing app with a bunch of interesting features and filters which is found pretty exciting by users. It allows you to share photos, videos, and reels and you can put stories, write captions, and a lot more things you can do without getting bored.

According to stats, the average day time of users of Instagram is increasing, as Instagram is keep working and coming with intersting features.As its cool features and reach, every age of people are using it. You can see in below state, it is used worldwide by every age of people.

Instagram Business Model, how instagram making money


There is no change in Instagram's business model from a long time, as it is the content sharing app but the monetization method has changed with time as Instagram keeps adding new features whether it's a story or reels.

Instagram targets people according to their interests, it allows users to express themselves.

It also comes with the pretty best filters which attract users.

The app uses users in a very proficient way by just provide them mediums like pictures, videos, and reels according to the trends. If you are using Instagram then you are their customers.

 It brings traffic to the advertiser’s websites as they put their site's link on site.

 Instagram makes revenue from advertising and user data selling. The app provides advertisers with various methods to advertise their content 

 It helps individuals to show their talents and provide them a platform.

It always walks with trends, it includes some cool features like hashtags, live video, IGTV, and much more.

As I said, It runs advertisements according to user's interest, which can be based on likes, comments, and sharing.

If you look at Instagram's Explore tab it will show you stuff according to your interests, Instagram will show you profiles according to your use of the app and also promote you according to other'+s history.

As the popularity of Instagram is increasing, it creating more jobs, and also some are working on Instagram as influencers.

Key picks from Instagram Revenue Model-

► Instagram gives priority to its users by offering straightforward and drawing in highlights in the application. This is the explanation because of which its client base is increasing really fast. It was not the absolute first photograph sharing application, not second and not even the tenth. Yet, what really made it stand apart was that it is anything but difficult to utilize, and offers genuine benefit to photograph darlings and picture takers.

► The main need for the app is user engagement. Instagram's major income source is advertisements, and that depends on how many users you have. you can only increase the users if you give your first priority to users.

► The third point really needs to be followed which is to keep the patient. No app can succeed overnight, you just need to wait and wait for the right time to take action.

While making a social photograph sharing application like Instagram, you should focus on unique ideas. Understand what is the target that you need to achieve with your application. 

► Now the last but not least that take small steps. As I said earlier you need patience and wait for the right time to take action but becoming greedy will throw your app down.


Thus in this post, we discussed the Instagram revenue model, and also go in brief of the money-making ways of Instagram. We also discussed how Instagram works, and how it turns into the best social media app, and this is how Instagram makes money, and in the end, we talked about if you want to make an app like Instagram what should you do and how Instagram is doing it.

By Jitendra

19 Dec 2020

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