It certainly was a wake-up call for me last month when Facebook announced that it was acquiring the photo-sharing app Instagram for $1 billion. The jaw-dropping payout was buzzed about everywhere and made me wonder: is there more to the app than a way to share photos with family and friends? What’s more, is this a social tool we as marketers need to be paying attention to?

Turns out, the answers are “yes” and “maybe.”

Instagram is now the hottest thing since, well, Pinterest. In fact, it already boosts more than 30 million users and 400 million photos. Why is this thing suddenly so insanely popular? I decided to take it for a two-week test drive. Based on my experience, I believe Instagram’s success can be attributed to the following:

· It taps into the power of community. Instagram is more than a photo app; it’s a social network in and of itself. Sure, there are other photo-sharing sites (and Facebook does this too), but Instagram elegantly creates a community solely dedicated to sharing photos. Built into the interface are community features that keep you coming back for more. “Home” takes you to the latest photos from friends and those you follow. “Popular” serves us a fresh batch of the latest and most-liked pictures. “News” reveals what’s happening with whom you’re following and who’s following you. “Profile” enables you to find friends, review your filtered photos, edit your profile and configure sharing on social networks.

· It’s nostalgic. Digital may have killed the sharing of physical photographs, but Instagram taps into what we loved so much about them in the first place, with 18 filters that can make new photos look old or as if it was from a Polaroid. Cool artistic effects are a snap too, including the ability to add borders and blur backgrounds.

· It’s free. Doesn’t cost anything (not even 99 cents) and (for now) has no advertising. No wonder, the recently released Android app garnered more than 5 million downloads in just a few days.

· It’s simple. One click is all it takes for you to Photoshop your cute little puppy and share it with the world. And, for social media connoisseurs, there’s nothing new to learn—incorporating hash tags and @ signs to simplify connecting of themes and users. Facebook can’t do that (yet).

· It’s the right time. Smart phones have become the center of our universe, plain and simple. In fact, Pew Internet Project just reported that more than half of all mobile users have smart phones. Instagram taps into our desire to share our stories—anytime, anywhere.

Instagram is perfect for brands that want to reach the young, artistic and hip—its core demographic, and can authentically tell their stories visually. This explains, perhaps, why fashion brands are currently leading the way. Some brands that have embraced the platform and built quite the following during the past year include Threadless, Playboy, Red Bull and Starbucks.

Ford Fiesta in Europe, for example, launched a contest last fall inviting fans to post photos about the car using the #Fiestagram hashtag. Every week, prizes were awarded for the best photos and were featured on the brand’s Facebook Page and on digital billboards.

From what I’ve seen, the brands that are currently using Instagram truly get it. They understand that it’s not about digitizing your product shots, but rather telling and collecting stories and making personal and emotional connections with your customers. As is a best practice with any social channel, meaningful engagement requires interesting content—content that is updated consistently and frequently—and encourages participation from your fans.

Do you have any Instagram stories to share? We would love to hear how you use it or plan to use it in your marketing efforts.

Peter Duckler

Peter Duckler