Tuesday, December 18th, 2012

Instagram – My Take on the New Terms of Service

Yesterday, Instagram, the popular image sharing community with a lot of nifty filters to choose from, announced their new Terms of Service (ToS) and the avalanche of posts of people wanting to delete their accounts that flooded the social media channels was massive, likely to make the largest piece of glacier breaking off ever recorded on film, seen in the ‘Chasing Ice’ documentary, seem like a snowflake tumbling towards the ground. (http://instagram.com/about/legal/terms/updated/)


I was upset too. In fact, I still am, but I get it – as weird as this may sound. I understand Instagram and Facebook for doing this. Having graduated in International Business and having completed one or the other marketing class in my life, I get it.

Over the past several years, pay per click (PPC) numbers declined (and so did the revenue). The reasons for that are diverse and I don’t want to end up giving a classroom speech here. Instagram, as well as Facebook, much like Google, offer a free service to their users. The ads they display are the essential piece of their revenue. The traffic (people clicking on the ads) they create is monetized and the more relevant the ad is to the user, the more likely he or she is to click on the advertisement.

For marketers and advertisers, photos taken with smartphones are especially valuable. Not because they are pretty or because Instagram is reserving the right to run actual campaigns with the images of the users in it, but rather because they contain specific information about the user in their meta data. Think location data. This information, not possible to be stripped on mobile devices, is then used to target the audience more specifically. In marketing, slicing up your target audience into the finest pieces and then delivering them highly targeted ads is a very complex field.

Oh, @davidrichterphoto just uploaded an image of some drink from xyz at 3am. Probably best to display a taxi ad.

Okay, this was a highly unlikely scenario – not because I wouldn’t upload images of my drinking habit (Guilty!), rather because taxi ads are extremely rare, but you get the picture. The advertiser (in this case, the taxi company or the firm representing the taxi company) is much more likely to run the ad with a company known to deliver to just that vulnerable crowd, thus cutting costs by not displaying the ad to people outside the target group. (Here, the vulnerable crowd or target group is the unfit-to-drive me.)

All fictional content aside, knowing exactly with whom you are dealing is the KEY to success for marketing companies. This information is extremely costly and often times, reliable, highly accurate location data is hard to obtain. The people in the marketing departments of Facebook think that the data behind the actual images of Instagram users is worth all the uproar it created thus far and can be of extremely high value to the advertisers, thus pulling Facebook stock out of the deep, deep valley it found itself in.

That’s my (hopefully mostly unbiased, business-professional) take on Instagram’s new ToS. Like it or not, it was a logical step for them to take from a business standpoint. I can’t help but think that Google had similar thoughts when acquiring Snapseed a while back. This, however, doesn’t mean I like it from a personal or ethical standpoint. Twitter just announced adding a filter collection to its app and so did resurrected flickr a while back. Places that will pull the crowds away from Instagram’s some 100 million user base. For me, time will tell if I stick with Instagram and see my images in hemorrhoid ads or pitch my filter tent elsewhere — starting January 16, 2013.

Tomorrow, I will be hand-delivering my best images of 2012, so check back and let me know what you think about the new Instagram Terms of Service in the comments.


AddendumDecember 19, 2012

After the gigantic avalanche of posts that was set loose and the massive media uproar, co-founder of Instagram, Kevin Systrom, tried to calm the waves with the following blog post: Thank You and We’re Listening, in which he explains that selling the actual images to advertisers has never been the intention of the new Terms of Service and that an updated version will be released soon that will address the unclear points.

“Instagram users own their content and Instagram does not claim any ownership rights over your photos.”

Systrom further explains that Instagram has been set up as a self-sustainable business, which means its ultimate goal is to make money (and which to me, is totally fine), and that some forms of “innovative advertisement” were to be tested in order to make it out of the ditch. (Instagram hasn’t run any sort of in-app advertisement in its years of operation and I understand they are at a point they can’t possibly avoid monetizing the 100 million user base and their content, to some degree.)

“Our main goal is to avoid things like advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.”

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