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A Market Analysis for

Instagram

Nicholas Metzler

Full Sail University

Project & Portfolio II: Business and Marketing

June 2, 2024
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EXECUTIVE SUMMARY

This report’s research showed the current standing and the future impact of all of

Instagram’s numerous features. The research conducted found whether each feature was a failure

that should be forgotten about, or a building block for Instagram’s future growth as a company

giant. For example, the report found that the Reels and Stories feature’s content is quite

rudimentary and currently not able to compare to the competition. However, the engagement

from users on these features illustrated that these features have potential to be a serious

cornerstone for Instagram. The report also finds that the AI algorithm for Instagram needs an

overhaul to keep users on the application. This report includes suggestions like updating the

algorithm and letting some features go for Instagram to fully realize their goal to become a social

media powerhouse.
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OBJECTIVE

This report aims to discover differing options Instagram can take to optimize their

features and their platform. This optimization will aid Instagram in having their features become

full of depth and become a competitor with the other features on the market of social media. The

information provided has been compiled to show Instagram the features that bring a net positive

to the company, while also showcasing the features that are hindering the future growth with

resources being wasted.

RESEARCH METHODOLOGY

The research information used in this report was retrieved during the month of May 2024,

and the data was collected from 2022-2024. The data was collected from various external,

quantitative sources from the Internet, from the likes of Statista, and Forbes. One of the

challenges that was faced during the research portion was the lack of qualitative data present.

The search for good qualitative sources is still pending.

RESEARCH AND KEY FINDINGS

When Instagram was founded, it was one of the very first multimedia phone applications

on the market. It grew into the premier photo sharing phone application on any play store

(Blystone, 2024). However, since Facebook (now Meta) bought the massive success of

Instagram, the applications has shifted from being the top photo sharing application on the

market, to something grander. Since 2012, Instagram has added new features like Shopping, the

Carousel, Direct Messaging, Stories, Reels, and most recently added Threads (Blystone, 2024).

These features have allowed Instagram to stay relevant to shifting audience’s preferences

through the years and keep up with the competition. However, the con of this strategy, that
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Instagram has been finding out, is that if you start to stretch too thin, there comes a situation

where the features are lacking depth in the

content and pales in comparison to the

competition. For example, Instagram Reels,

which is the direct competitor to TikTok in

the minute-long digestible video content

market, has been losing their reach from the

last two years. Accounts that have the

highest follower count in the range of 50,000 to 45 million followers, saw their videos were

reaching almost 50% less followers than in the previous year (Dixon, 2023).

This is a mixture of the content from the creators on Instagram being buried by the

algorithm and not being able to become prominent on the platform. This is a problem for

Instagram, because of the American ban

on TikTok, Instagram can take full

advantage of the opportunity that presents

of new fans, but the algorithm needs to be

fixed first to see that advantage realized.

Instagram’s algorithm has been good

from the time that it debuted, however,

the information used to feed the algorithm

is not useful anymore to keeping users on the feature. These “signals” or the information

Instagram uses is User engagement, Interaction history, the content of the Reel and who posted it

(Hill, 2023). Therefore, if a creator is not already popular, the algorithm will not push their
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content to the forefront, which allows big creators to dominate the pages, and users will get

bored of the same creators being shown to them and leave the feature to find something else to

satisfy them, most likely the competitor

TikTok. Instagram also has the problem of

trying to get new users to come into the

application because only .2% of the 2 billion

active users on Instagram are new to the

platform (Zote, 2024). Instagram has used AI

and AR technology to use for filters for Stories

and Reels, however the usage of these AR filters pale in comparison to Snapchat, who came up

with the feature first (Geyser, 2024). Another upgrade that Instagram needs to address is the

average time that a user uses Instagram. Instagram is fourth on the 2023 list with US adults

averaging 33.1 minutes every day on the app (Zote, 2024).

This is behind their competitors in TikTok and Twitter (now X) with their Reels feature and

Threads.

CONCLUSIONS

Instagram is at the top of the industry currently with 2 billion active users (Zote, 2024).

However, Instagram has found itself where it must update the algorithm and put more depth into

the various features that they have implemented to keep up and eventually surpass their

competition in TikTok and X. Since Threads is so new to the scene, it will be interesting to see
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how Instagram’s counterpart to X will fare in the market of the social square market that X has

taken a hold of. Instagram has grown significantly, but there are improvements to be made in

every area of Instagram to become like their parent company Facebook did in the early 2000’s.

Instagram has a hold on the 18–35-year-old range, but to keep that base intrigued in their

product, they must keep innovating, which they are able to with their loyal fanbase of 2 billion

users. I believe that Instagram will take the necessary steps to improve on their foundational

features and will become a real competitor in the markets where X, TikTok, and Snapchat rule

the day.

RECOMMENDATIONS

Instagram must capitalize on the brand loyalty their fans have for their product and

continue to innovate and try out new fields and features that they believe they can improve and

become a true competitor in. Instagram needs to use the fact that they are fourth on the average

usage time in America to keep making that number go up so that they can be an even bigger

player and bring in more eyeballs to the site. Instagram should strive to increase the engagement

on every feature to 15% more engagement by working on the algorithm that has shown to plague

them, specifically when it comes to Reels. This will help keep people wanting to create on the

platform and in turn will increase time used on the app where Instagram will become even more

of a powerhouse with being neck and neck with TikTok. The unknowns still are the advertising

effects that need to also be worked on with the Shopping feature that needs work done to keep

that feature alive. Some research into the number of people who participate and buy on

Instagram Shopping would help find if Shopping is a feature that should be in the conversation to

be kept or discarded to help with Instagram’s focus being on the social media side more.
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REFERENCES

Blystone, D. (2024, January 12). Instagram: What It Is, Its History, and How the
Popular App Works. Investopedia.com. Retrieved May 11, 2024, from
https://www.investopedia.com/articles/investing/102615/story-instagram-rise-1-
photo0sharing-app.asp

Dixon, S. J. (2024, April 29). Most popular social networks worldwide as of April 2024,
ranked by number of monthly active users. Statista.com. Retrieved May 11, 2024, from
https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-
of-users/

Geyser, W. (2024, January 30). Instagram Stories AR Filters: What Are They and How
Are Brands Using Them? Influencermarketinghub.com. Retrieved May 19, 2024, from
https://influencermarketinghub.com/instagram-stories-ar-filters/

Hill, C. (2023, March 23). The Instagram algorithm: How it works and strategies for
2024. Sproutsocial.com. Retrieved May 19, 2024, from
https://sproutsocial.com/insights/instagram-algorithm/

Zote, J. (2024, February 22). Instagram statistics you need to know for 2024
[Updated]. Sproutsocial.com. Retrieved May 19, 2024, from
https://sproutsocial.com/insights/instagram-stats/

APPENDICES