In April last year Facebook paid one billion dollars in cash and stock to buy Instagram. Initially it was a puzzling move. After all, the photo-sharing app lacked, indeed lacks, a working revenue model. It’s not built for your laptop, and there’s no room on your iPhone for ads. Perhaps Zuckerberg did it to spite an ex-girlfriend, or perhaps, more plausibly, Facebook was scared; scared that one day there would be no Facebook and Instagram would have taken its place. In the end it’s more important to have a community, even one that isn’t generating cash, than no community at all. If you can’t stop them leaving, maybe you can buy where they’re heading to next.
But Instagram couldn’t remain a loss-leader forever. So it came as no surprise when, in December, they posted changes to their terms of service. And they weren’t pretty. The new terms seemed to propose that Instagram had the right to sell your photos to advertisers, without warning or compensating you. And this raised the terrifying possibility of a picture of you at your nephew’s birthday being used to advertise chlamydia screening or incontinence pads or BMWs or well, anything really.
It was weird that they ever thought this would be OK. The backlash was as loud as it was inevitable. It didn’t take long for a shirt-rending apology to appear on Instagram’s blog. CEO Kevin Systrom, explained that “it is not our intention to sell your photos” – which was strange given that that was exactly what the new terms appeared to give them the right to do. On December 21 they reverted to their original agreement and proclaimed that from now on they would “obtain permission from you to introduce possible advertising products we have not yet developed”.
Instagram had listened, which was nice, but really they had no choice. After all, if you didn’t like their terms, you might well have found Flickr’s or Picassa’s more congenial. Instagram’s position is particularly unstable because their community is their only asset. If you gain 100 million users in three years you might well worry how long it would take to lose them.
But there is something, aside from OxyContin, that would help the social media oligarchs sleep at night. The new generation of internet companies have grown without advertising. “We don’t need to advertise,” they say, “because our users love what we do.” But as every FMCG brand knows, one of the advantages of advertising is that it can make consumers love you beyond what you do. If they regard you more like a friend than a stranger, they’re less likely to leave you when the next attractive stranger comes to town. This is what brand loyalty means.
Maybe you don’t need to advertise to build a community, but it might well help you to keep one. It seems that Zuckerberg and his ilk are learning this lesson: money can’t make people like you, but Wieden + Kennedy Portland might be able to help.
‘Gordon Comstock’ is an ad creative based in London. He tweets at @notvoodoo