Smaller brands may as well say goodbye to Instagram

Instagram announced on Tuesday that it wants to start using algorithms to determine which posts are most interesting and relevant to users, which it described as being designed to improve the user experience, but is really just a way for the social network to have more control over what users see. Naturally, this will mean more targeted advertisements, which is great for large brands with a massive advertising budget, because all they have to do to tap into Instagram’s userbase is write a nice, fat check to Facebook. This isn’t good for smaller brands, however, because instead of using quality posts to gain popularity and recognition on Instagram for free, they’ll need to start paying for their advertising.

Earlier this week Instagram updated its news feed algorithm. Posts will no longer appear in chronological order and instead be sorted “based on the likelihood you’ll be interested in the content, your relationship with the person posting, and the timeliness of the post.” What this means is that Instagram will choose what to surface and when – essentially mirroring Facebook’s news feed. This change is being spun as a way to optimize a user’s feed, when actually it grants Instagram the power to control ad content. “On average, people miss about 70% of the posts in their Instagram feed,” says Kevin Systrom, the co-founder and CEO of Instagram. “What this is about is making sure that the 30% you see is the best 30% possible.” While this certainly is true, make no mistake, Instagram is about to do this for monetization. Facebook, who owns Instagram, just announced $5.8b in Revenue in Q4, a staggering 51% growth over the prior year. While Facebook’s growth rate has consistently been over 40%, maintaining that growth is not simple by any means. By applying Facebook’s historical growth rate, they need to produce an incremental $2B in growth next quarter and another $3B in growth in this quarter next year.