Instagram head of product Vishal Shah says the platform's next great revenue driver will be e-commerce:
And e-commerce can boost the ad business, and vice versa, in a virtuous cycle. As more users make in-app purchases, brands and businesses of all sizes are likely toby purchasing more ads on the app. The hope will be to direct users to the Instagram profiles of brands, which will increasingly act like virtual storefronts where users can buy products. Instagram now has 25 million active businesses, and half of them don't list a website, meaning they're native to Instagram.
Instagram sees its biggest opportunity in product discovery — which can"broaden the spectrum" of what a user is looking for. More than four in five Instagram users say the app helps them to make purchasing decisions, with 83% saying it helps them discover new products or services, per Facebook IQ/Ipsos.
We believe that Instagram can make good on its growth vision, but it will need to ensure that it puts user needs first. That becomes particularly crucial as the app rapidly scales the number of users, businesses, advertisers, and content that exist on the platform. If Instagram's e-commerce push is too heavy-handed, users might become frustrated with constant nudges toward spending money.
As a result, Instagram could risk alienating people who don't want to use the platform to shop, but just want to share or experience content. And, per a recentby Taylor Lorenz in The Atlantic, Instagram could face a more fundamental challenge around user primacy: a rising tide of extremist content on the platform.
The issue will be familiar for Facebook, which knows how persistent and harmful such content can be. That could harm Instagram's reputation for being a clean, fun place for users to engage with content, in turn causing brand safety issues that could give brands pause when considering whether to commit to Instagram as both an advertising and commerce platform.1. Sign up for the Digital Media Briefing to get it delivered to your inbox 6x a week.
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