But Instagram isn't Facebook. Nor is it Pinterest, LinkedIn,
Twitter or Yahoo, all of which are finding ways to push ads into
user streams. (Yahoo coveted a news feed so much that it went to
the lengths of overhauling its home
page in February to introduce one.)
News-feed ads are compelling to these companies because they can
be slipped onto small mobile screens and be almost as unobtrusive
in the flow of content as they are on desktop.
But just because in-stream ads worked on Facebook doesn't mean
they'll also work on Instagram, regardless of how artfully they are
made. For one thing, the Instagram experience is more focused,
forcing users' attention onto a single image perfectly framed by a
smartphone screen before they can scroll past. Ads will be more
conspicuous there, which is what's attractive to marketers but also
potentially disruptive to users.
Marketers like GE, Adidas, Macy's and Burberry were quick to
recognize the value of Instagram's 150 million users and embraced
its quirky aesthetic to create content that works there. Those
companies will be among the first 10 to push out Instagram ads, and
more are bound to follow once Instagram opens its doors to
But just because the handful of beta testers know what they're
doing on Instagram doesn't mean that the masses will be prepared.
Users chose to follow based on their artistic appeal -- it's a
different standard than Facebook, where users friend people and
follow brands for a multitude of reasons.
Being skilled at setting up display campaigns on Google AdSense or even
Facebook won't necessarily translate on Instagram.
"It's going to be hard because they're going to have to come up
with visually resonant sponsored photos that work in that
[Instagram] medium," said Jessica L'Esperance, VP-user experience
As the only true mobile-only social network, users can't become
acclimated to ads in a desktop environment where they can be
slipped onto the edge of a page (i.e., Facebook's right rail.)
"My sense is that [Instagram is] a less receptive environment
for a commercial intrusion," said Jeff Dachis, CEO of social
analytics company Dachis Group.
No one says they like advertising, but Instagram sure is getting
an earful in response to its first house ad that hit user feeds
this week. Two of the most recent comments read: "Yep gonna delete
Instagram when this starts" and "@instagram don't do it, you will
become boring and full of ads like fb.") A vocal minority, perhaps,
given the more than 800,000 likes, but Facebook would be wise to
But there's another path – Instagram doesn't need ads to be
successful. Actually, Instagram doesn't need to be directly
monetized at all; it could just as easily deliver value by
increasing engagement where Facebook already makes money: the
Facebook news feed.
Engagement with Instagram photos yields more time spent on
Facebook, and from there, more dollars into Facebook's well-oiled
"Facebook really can benefit from the incremental network effect
of [Instagram]. They don't need to do anything with it, much like
Twitter doesn't need to do much with Vine," Mr. Dachis said.
In contrast to the early days of Beacon and other privacy
debacles, Facebook is now exercising extreme caution with new ad
units. It took a year to figure out mobile and Facebook is still delaying the launch of video ads due to
user experience concerns.
You have to wonder if Facebook is taking the same caution
vis-à-vis its decision to launch Instagram ads with a beta
group that's made up exclusively of marketers who are already good
at publishing on the app.
There's also a review process in place where every ad will be
evaluated before being eligible to be put in front of users, a
Facebook spokesman said.
But why take any risk at all? Well, there's pretty big market
there, if it works. Deutsche Bank analyst Ross Sandler projected
that Instagram's worldwide revenue would be $475 million next year,
while a more conservative prediction from Aaron Kessler at Raymond
James put it at $178 million.
Pressure to grow revenue quickly could make it more difficult
for Instagram to maintain the high quality bar for content it's
currently imposing on marketers.
Placing ads in-feed means soliciting ads that users might see
anyway. Take a recent image posted by W Hotels -- part of new
Instagram ad client Starwood's portfolio -- that shows the prow of
a boat over aquamarine water and feels like the equivalent of a
picture a friend would post from vacation.
That's easier said than done, especially at scale, but Adam
Kleinberg, CEO of digital agency Traction, thinks Facebook can find the
balance with Instagram.
"The [Instagram] interaction is all about flipping through a
large volume of visual content," he said. "As long as they don't
overdo it, I think that people will be really inured to ads in