SXSWORLD

Facebook Banks on Timeline with Instagram Purchase by Michael Trice from Microsoft is worth noting, the $1 billion purchase of two-year-old mobile app Instagram (still technically a pending transaction at the time of this article's writing) remains the shocker, if only for the price tag. Th e purchase has many industry analysts wondering if Facebook has changed its strategy of dissolving past acquisitions. "Facebook has the money to spend, and they do a decent job of making acquisitions that fulfi ll a strategic gap in their capabilities," explained Lin Humphrey, a researcher and 2011 Mobile Marketing Academic of the Year. "Th ey may typically sunset the off erings of the companies they buy, but I don't see that here. I expect to see deep integration of Instagram into the Facebook experience." In light of the forthcoming IPO, further approvals needed by the SEC due to these recent purchases and remaining closing condi- tions for the Instagram purchase, neither Instagram nor Facebook felt inclined to comment about the future role of Instagram and its employees beyond the initial press releases. Yet, what both companies have made public appears to indicate a commit- ment to growing Instagram as an independent application. Facebook Founder and CEO Mark Zuckerberg's post on the acquisition high- lighted a respectful restraint about not wanting to force a wholesale integration of Instagram into Facebook, as well as a desire to maintain Instagram's utility and independence on other platforms. Zuckerberg did, however, go out of his way to promote Facebook as the primary social media site for sharing photos with friends and families. Regular SXSW panelist and social media expert Dr. Cindy Royal of I n advance of Facebook's IPO, rumored to happen later in May, the company went on something of a spending spree last month. While the more recent purchase of $550 million in former AOL patents Texas State University – San Marcos points out that there are key dif- ferences between the Instagram purchase and that of one of Facebook's other high-profi le acquisitions, Gowalla, which ceased operations after the purchase. "Facebook had to be impressed with and somewhat threatened by the Gowalla was never able to diff erentiate itself from Foursquare, even though many users preferred the interface." Instagram's vitality could prove useful for Facebook's Timeline interface. While Timeline does not appear by name in Zuckerberg's comments, a number of analysts believe that the new feature played a key role in the Instagram purchase. Humphrey off ered that with the launch of Timeline, "Facebook is all about documenting the participant's experi- ence and hedonic consumption through the syndication of information from social mobile apps. Users take a picture with Instagram, and it shows up in a nice little box on their profi le. Someone buys from Fab. com, and the same treatment is shown." "Inside Instagram" with Mike Krieger (L) and Kevin Systrom (center) interviewed by Alexia Tsotsis of TechCrunch. "Facebook had to be impressed with and somewhat threatened by the rapid growth and enthusiasm around Instagram..." rapid growth and enthusiasm around Instagram," she observed. "Had Facebook not purchased them, Instagram would have continued on this trajectory. Gowalla however, at the point Facebook purchased them, had few options: get purchased or unceremoniously cease operations. 36 SXSW ORLD / M AY 2012 he predicted. "Photos are the core of Facebook engagement." Such sentiments echo Zuckerberg's own thoughts on the importance of photographs to Facebook's continued success. Clearly, the purchase of Instagram by Facebook will be a boon for the company and represents a diff erent type of commitment to acquired assets than previous purchases. Th e core question remains whether (or when) Instagram will off er profi table returns that match the $1 billion investment that Facebook has made. Th e price could be even steeper if the recent purchases slow the SEC's approval for the May IPO. Facebook has made a monumental investment in both Timeline and Instagram, and part of Instagram's independence may be a factor of just how profi table the acquisition must become over the long haul for Facebook to prove it was worth the price. ■ While Facebook has domi- nated headlines with these purchases and its looming IPO, the company hardly stands alone as a force for con- solidation in online media. During SXSW, rumors ran wild about CNN's interest in Mashable (at a price tag reportedly to be one-fi fth what Facebook paid for Instagram), and while those rumors have died down, they certainly have not completely faded away. Mashable's former editor- at-large Ben Parr refused to address either these acquisition rumors or how Facebook's consolidation eff orts compared to those of CNN. However, he did share some thoughts about the Facebook purchase. "Instagram integration in Facebook Timeline is going to shoot engagement for both products through the roof," CARLOS AUSTIN

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