News & Views
The advertising potential of Instagram

Instagram has recently signed a deal with advertising company Omnicom, who will run up to $100 million’s worth of ad placements on the image sharing network this year. This is a major step towards monetisation for a platform that has previously generated zero revenue from its vast user base.

Omnicom, whose clients include household names such as AT&T, Nissan and Pepsi, will work alongside Instagram on advertising campaigns, in order to produce content that is the right fit for the platform and its users. They might be taking a cue from Tumblr, where a number of brands have experienced success by tailoring their approach to consumer habits and trends. And much like Tumblr, the visual focus of Instagram may be a boon to Omnicom. “When scouting Twitter and Facebook, advertisements always cut across the grain of the user experience,” says David Robinson at Pando Daily. “With Instagram, the ads fit in it like a glove.”

The collaboration between Instagram and Omnicom is what sets this deal apart, says Pascal-Emmanuel Gobry at Forbes: “The point here is that Instagram is going to work closely with major ad agencies to learn what they like and don’t like instead of, as arrogant Silicon Valley companies are sometimes wont to do, trying to shove some ad buying software down their throat if they want to put ads on their site, whether they like it or not. This means Instagram will learn what agencies like and that way it’ll be able to improve its ad formats.”

L2’s Intelligence Report calls Instagram “arguably the world’s most powerful social platform”. If the latest stats are to be believed, then Instagram has an engagement rate 15 times higher than Facebook and forty times greater than Twitter. And if that didn’t sweeten the deal enough, there’s also the fact that Instagram’s core demographic is young, affluent, and female. In other words; an advertiser’s dream.

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