Facebook’s most recent acquisition has been the biggest tech story in the past week, and the backlash from Instagram users has already begun. Rupert Staines, UK MD of RadiumOne, takes a look at what the deal will mean for the photo sharing app, and how Facebook can assuage customer fears over advertising and privacy breaches.
We are already seeing a major backlash and users closing their accounts in their droves. One of the main issues we have seen is users voicing concerns that they don’t want their feeds flooded with advertising. This could prove to be a major headache for Facebook.
They made $4bn in advertising last year; they have a valuation, with the imminent IPO, of potentially $95bn. They have to justify this somehow and one of the key ways to meet this astronomical valuation is naturally through advertising.
However, the problem facing Mr Zuckerberg is that, despite it being a colossus of the Internet, Facebook remains a walled garden – it can only reach the consumers within its perimeters. And this could prove to be highly restrictive.
Of course, their consumers can be targeted in a relevant fashion, but in order to foster engagement, it’s likely that the level of advertising will have to be intense. This could prove to be a major headache for Facebook.
By Rupert Staines
UK MD
RadiumOne
http://www.radiumone.com/
