Identify a new monetization strategy for Instagram.

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Identify a new monetization strategy for Instagram.

Asked at Instagram over a year ago

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Hung Nguyen · Answer 1 · 2020-05-09T00:41:57+0000

Clarifying Question

Do you want to monetize from existing features or new features? => I will assume that the answer is Existing features
Do you have any feature you want me to focus on? => Up to you => I will choose the Story feature because as I know, this feature has a lot of users’ interaction.

Company/Product
1. Product

Instagram
- IG is the photo and video-sharing social networking service.
- Owned by Facebook
- Having both Android and iOS version
- The app allows users to upload photos and videos, which can be edited with filters and organized with tags and location information.
- Posts can be shared publicly or with pre-approved followers.
- Users can browse other users' content by tags and locations, and view trending content.
- Users can like photos and follow other users to add their content to a feed.
Story Feature
- Be similar to snapchat in which people can capture their moments and they only show up within 24 hours
- Followers cannot write public comments on the Story. Instead, they only react and write private messages to the story’s owner

1. Company

Facebook is one of the largest social media company at the moment
They have excellent employees, huge resources, and large user base

Strategy

Acquire more story’s viewers by doing marketing campaigns on Facebook and other products, such as Whatsapp, …
Improve the recommendation system to make sure users will click to the ads we recommend, so we can charge more money from ad’s owners. This means we increase the revenue per good.
Implement the “party ticket fee” features in the story. As I see, during the pandemic time, a lot of people livestream the party in their own IG account. To do that they have to create a new account and set it to be private. To join in the party, participants have to pay for them an amount of money by using PayPal or other platforms. Therefore, IG can create a new feature to help party organizers hold their own party in their main account and other users have to pay if they want to come.

Evaluation

Impact

Revenue

Complexity

“Party ticket fee” features

HIGH

During the pandemic time, the users’ need for virtual parties is very high.

Event organizers want to acquire more participants so absolutely they will prefer their main account to clone account just for doing livestream.

HIGH

This is a new feature which can fulfill users’ needs at this time, so the revenue would be high.

LOW

I think IG has already had a livestream and donation feature, so they only need to reuse them.

Acquire more users

LOW

The number of new users are not too high

LOW

We have to take time and effort to make sure new users will use our feature regularly. The cost must be nearly higher than profit at the first time.

HIGH

It’s not easy to acquire more users when IG already has had a lot of user’s groups

Improve recommendation system

MEDIUM

Users may need some ads related to their needs. But we’ve already had a recommendation system at the moment. So its impact cannot be high

HIGH

We can earn more money by increasing the click times.

HIGH

From a technical perspective, I think improving the recommender system is hard and needs a lot of resources. But the result cannot be like what we expect

Recommendation

According to the evaluation, I think creating a “Party ticket fee” feature is the best strategy we can do right now to increase the revenue of IG. HIGH impact - HIGH Revenue - LOW Complexity

Prateek Sachdeva · Answer 2 · 2023-10-02T03:58:54+0000

Clarifying questions:

Do we have any specific feature of Instagram that we would like to monetise? (No)
Are we monetising current Instagram features or building a new feature to monetie? (current)
Meta mostly runs on an ad-driven revenue, what kind of monetisation did we have in mind? subscription model
There two user segments involved (consumer , creator) what segment are we looking to monetise? Creator
Do we have any restrictions when it comes to this strategy (budget / legal / compliance constraints?)

Litmus check:

Is Instagram ready to monetise?

Retention: Instagram is Meta’s one of the most popular products, Almost 40% of Meta’s annual revenue is from Instagram alone. As instagram has advertisement driven revenue, for that you need to have content consumers so this does mean that we have a very strong retention.

Core usage:

Frequency: Most Instagram users (an average user approx 40%) open and uses Instagram atleast 2-3 times a day. ✅
Breadth: An average user on Instagram consumes reels, posts, stories, DMs (all 4). The creator economy is also a consumer economy on Instagram and vice versa. it’s not exclusive. ✅
Depth: An average on Instagram is atleast 15 minutes long. Most power users spend way beyond that. ✅

Willingness to pay:

Conduct user interviews, surveys and polls to identify this point.

There are two aspects to this problem:

capacity of paying: ask basic questions about their age, demography, Instagram usage, their earning capacity, and how much would they be willing to pay for Instagram. ✅
desire to pay: We need to understand what kind of features would they pay for, we can ask our creators directly or we can do this in the form of ‘Rank Features’

For the first:

Creators on Instagram above a decent following have enough earning from the platform that they can easily pay.

For the second: (How much to charge?)

we will bundle Instagram features and ask the creators to select which bundle would they be willing to pay for. We can do this in the following way:

Hidden bidding: Don’t disclose what the other’s have bid for the features. Select the bundle which has the most number of biddings and in that select the second highest price.

(We can identify through this how much would they pay)

Both should be there.

Who do you charge?

RFM (Recency Frequency Matrix)

For instagram we should target the following three types of creators:

Champions: These are the power creators on Instagram, creating content atleast once a day and are also monetising their Instagram profile.
Loyalists: They are frequent creators and create content atleast 3-4 times a week. They have a decent following & engagement rate as well.
Potential Loyalists: They are on their way to becoming Loyalists and have identified the creator potential on Instagram.

When to charge?

Perceived value >> Perceived Price

Perceived price for creators: Buying a subscription on Instagram to access creation tools like edit, filters,, reel templates etc.

Perceived value: create viral content, earn a lot of following and engagement, create a steady source of Income.

What to charge?

Access, Time, Shareability, Output.

Instagram’s model mostly works by providing access and shareability of content

We should charge for:

access to content creation tools (time based subscription for a month)
Shareability (You can only post content say 4 times a week, in this subscription model)

How will we show the pricing?

Bundle a couple of features and create 3 bundles atleast and price them according to the top 3 bids that you received. Each bundle would have a variation in terms of access and shareability.

For eg: Bundle 1: You can use only filters/ editing tools and create content upto 2-3 times a week (Priced lowest)

Bundle 2: You can use filters/ editing tools/ reel templates (but not livestreaming) and create content for 4-5 times a week

Bundle 3: All features, unlimited content (priced highest)

Middle effect: Place the bundle that you want to be sold the highest in the middle (cognitive bias). You are selecting on behalf of your users.
Strikethrough pricing: Give an illusion of a discount to the user.
Launch plans for longer duration and give the user the benefit of opting longer plans (annual subscription over monthly). This would ensure that your user stays for a longer time.
System 1 vs system 2 design. Instagram being a low order value subscription should ideally have system 1 design. But for the launch we need to inform the user of all the features they would be getting with this subscription so we will opt for system 2 design in the initial phases. (High effort, more comprehensive, logical and rational decision)