Facebook's Instagram signs big ad deal

Facebook’s Instagram photo-sharing service has been treading softly as it experiments with showing advertising to its users, but you can expect to see more commercial messages there in the coming year.

AdvertisingAge reported this week that Instagram has signed its first major deal with a major ad agency –  an agreement with Omnicom Media, the giant conglomerate that owns such leading ad firms as BBDO and TBWA/Chiat/Day.

The deal is effectively a commitment by Omnicom to spend up to $100 million on Instagram ads in the coming year, according to AdAge’s Alexandra Bruell. An Instagram spokesman confirmed the deal to Silicon Beat, but wouldn’t confirm the reported value of $100 million.

Along with helping commercial clients develop their ads, Omnicom will help them with targeting the right audiences on Instagram and measuring the results. AdAge also reports that Instagram is talking with another giant agency, Publicis Groupe’s Starcom MediaVest.

Many Instagram users worried that Facebook would ruin the service, which is especially popular with smartphone users, by introducing too many ads after the social networking giant bought Instagram in a deal that turned out to be worth $700 million in 2012.  But Instagram chief Kevin Systrom has said the company is sensitive to that concern:

The Omnicom deal “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 Jim Squires, Instagram’s director of market operations, in a statement released by the company.

Facebook has already built a thriving mobile ad business over the last year. Research firm eMarketer says Facebook had nearly 17 percent of the $18 billion spent on mobile ads worldwide last year, up from 5.3 percent in 2012. But Google still dominates the market with nearly 49 percent of mobile ad spending.

Brandon Bailey Brandon Bailey (323 Posts)

Brandon Bailey covers Google, Facebook and Yahoo for the San Jose Mercury News, reporting on the business and culture of the Internet.