Affiliate Marketing

Instagram Cuts Dependence on User Data-Without Cutting Into Its $26 Billion Ad Revenue

Meta, the new face of Facebook, has been scrambling for months to develop an ad strategy that doesn’t rely on users’ personal data following the parade of legal battles that keeps marching on. After jumping through hoop after hoop, Facebook may have finally found the golden ticket to generating billions in revenue without digital privacy issues, user data-or ads at all. 

Instagram, a child company of Meta, is testing something it’s never done before, which will give users something they’ve never had before: a way to earn a steady, fixed income from the platform. In other words, influencers will no longer depend on external resources to make money-but directly from the platform. 

The new feature-and revenue stream-comes as a result of Facebook’s failed attempt to find a way to target audiences without audience tracking after losing its battle over privacy and sinking millions into it in the process. What it found is that it didn’t need a way to skirt ongoing privacy issues as much as it needed a way to earn revenue without ads. And now, that’s exactly what it’s trying to do. 

Now, Facebook is testing out yet another new feature on Instagram that would create a new billion-dollar revenue stream without any ads or tacking-but with paid subscriptions. Proving that while Apple ATT is actually good for businesses, in a surprising twist, it might also be good for Facebook as well. 

This feature enables users to offer gated content exclusively to paying subscribers. It gives users a way to earn an income directly from the platform and it gives the platform a way to generate revenue directly from its users.

It’s a brilliant revenue stream because it is mutually beneficial. Because of this, it stands to make ads take a backseat to its $26 billion dollar ad revenue-which now accounts for over 50% of Meta’s total ad revenue as it shifts its revenue strategy away from advertisers, and puts its users at the wheel. 

The revenue model that is anything but revolutionary could prove genius for the platform that has served as a marketing tool for influencers for decades. In fact, the subscription-based social media platform, OnlyFans, was created to give Instagram influencers a way to generate a fixed monthly income online-no paid sponsors or affiliate marketing partnership required. 

Since it launched in 2016, OnlyFans has grown into a platform with 120 million users and over $2 billion in sales last year. But, the platform quickly became riddled with adult content, giving it a notoriously nefarious reputation-one that the majority of Instagram influencers wouldn’t want their personal brand to be associated with. 

In other words, Instagram has a far greater opportunity to amass billions by offering a subscription feature given its near 1.4 billion users. And that’s without compromising one’s reputation-or creating a whole new brand image. 

What we’re seeing is that as Instagram grows, it seems the platform is beginning to find its footing. Though that doesn’t mean it’s not still experiencing growing pains. 

After its recent update, Instagram everyone what they wanted, but with one major caveat- it will likely come at the expense of more in-feed ads. And to counter that, it’s giving users a way to avoid ads altogether by paying to view content from specific creators, much like YouTube’s revenue model. 

While this could raise concerns that it will lend to a poor user experience for those who don’t want to pay to access gated content of their favorite accounts, the reality is that creators will need to work harder to create free content that entices people to subscribe for paid content. And still, the vast majority of accounts will remain open to followers. 

It is a major step for the ad-reliant platform that moves the dial towards aligning its goals with its users’ goals. So the platform may not be perfect, but it is making progress. And for the first time, it’s walking away from hedging its advertisers against its users and instead is doing what every business should: it’s setting the stage for a symbiotic business relationship rooted in a win-win strategy. 

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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