Instagram has signed a reportedly $100 million deal with its first ad agency. After introducing a very limited number of ads through the app last year that saw wild success, the company has decided to enlist the help of Omnicom with a year-long commitment.
This new deal means that users of Instagram, a photo and video sharing app, will begin to see advertisements integrated into the news feed. The deal has been confirmed with not only Omnicom, but also Facebook, who purchased the company back in 2012. That purchase went for a whopping $715 million in cash and stocks, and many worried at the time that Instagram would be bombarded with ads due to the influence of the company’s new owner.
However, Instagram has only seen the roll out of a very select few ads, which proved to be successful. One such ad was from fashion designer Michael Kors. That ad, which was a picture of a gold watch surrounded by macaroons, appeared in the feed of users who did not follow the fashion designer. The picture went on to see over 200,000 likes in the first 18 hours of the ad being introduced, which was a 370 percent increase to what Kors normally saw. While many complained about the ad, it also introduced 33,000 new followers for the designer. In the end, the ad had a reported audience of over six million viewers. Other companies that featured similarly successful ads at the time were Ben and Jerry’s, Levi’s, General Electric and Lexus. The only parameters for who these advertisements went out to were gender and age, information that was gathered from Instagram’s parent company, Facebook.
Instagram boasts a community of over 150 million users who are active on the app, 60 percent of which are outside of the United States, with about 55 million photos being uploaded every day. Many users who are worried about the company’s $100 million deal with the ad agency have concerns about news feeds being bombarded with advertisements. “This doesn’t change our advertising strategy moving forward. People will continue to see a limited number of beautiful, high-quality photos and videos from select brands who already have a strong presence on Instagram,” said the Director of Market Operations for Instagram, Jim Squires. “Our teams are going to work hand in hand to develop and execute campaigns that provide people with amazing imagery. This is an exciting new chapter and we are looking forward to the great creative content that comes out of this partnership,” he said.
Instagram assures the process for displaying and buying ads will be selective. The company states the goal is to remain consistent with the content that is already in the news feed. An ad would stay in a user’s news feed for a day or so. In a report from AdAge, Omnicom will be helping Instagram develop more of a target on who the ads are marketed to and how long each ad may run.
“This is another example of media becoming the message, said Daryl Simm, CEO of Omnicom Media Group. “It is a high quality engagement with the consumer as opposed to a quick hit.” He added that for Instagram’s $100 million deal with the ad agency, “it’s a real development in terms of the paid advertising opportunities they are offering.”
By Nathan Rohenkohl