The internet world, which let’s face it is a synonym for the whole word, is abuzz with the news of the acquisition of Instagram by Facebook. Most pundits evaluate whether the $1 billion is a fair deal or whether it’s further sign of a tech bubble. The significance for marketing though is that all signs point to the Instagram acquisition as competitive strategy.
Big and rich brand buys out small and upcoming competitor, rubbishes the service or product, and the master brand is saved! It’s happened in this market, perhaps most infamously by Coca-Cola. The acquisition of beverage brands such as Mirinda and Limca, protected master brands Fanta & Bitter Lemon. Both Mirinda and Limca quickly disappeared from view, budgets streamlined, advertising support non-existent. Without this competitive strategy it is easy to see that Fanta may not have survived. Giving that Zuckerberg was willing to pay up to 50% above valuation for Instagram, it is not far-fetched to think of this acquisition as a competitive strategy that will see at least some degradation of the Instagram brand and it’s services/management.
Winners here are Facebook and Instagram founders, now worth half a billion dollars!
Losers? Instagram users. (look we rhymed….)