Instagram opens the advertising floodgates

Facebook-owned photo sharing service Instagram is preparing to open the floodgates for more adverts, after a trial run with some of the largest advertising agencies.

Instagram is opening its API to all ad-networks, allowing companies like Salesforce and Brand Networks to begin pushing ad campaigns on the network. It will utilise information from photos, hashtags and location to offer contextual ads that attract the viewer.

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It is the first time ad networks and companies have been able to post ads on the platform. Some analysts suspect this will cause a huge surge in revenue that could match Google and Twitter.

Instagram has 300 million active monthly users, a few million more than Twitter.

There are some downsides to more adverts on Instagram, the first being the quality of adverts. Under the old terms, only the biggest ad networks were allowed to work on the photo sharing platform, and it made for subliminal and well thought out ad campaigns.

Now the floodgates have opened, we suspect the quality of adverts will drop. Things like game ads, buy buttons and linked pages will become commonplace. Instagram has not publicly said what the split between friends and adverts will be, although it did say users will not see many adverts.

Plenty of companies have built a strong reputation on Instagram since launch as well, meaning there is little need for advertising campaigns. Ben & Jerry's has over 500,000 followers and Adidas has over 5.2 million. Unless Instagram pushes companies into a new system where they cannot freely advertise, like Facebook did, it is going to be hard to make a company pay hundreds of thousands for an ad-campaign.

Instagram adverts can be in the form of photo or video, a more expensive option compared to text ads. The personal focus of an Instagram account could lead to more detailed advertising, and we also expect the food industry to be happy with the open API, since a whole lot of people post pictures of their food on the network.

Adverts were inevitable on Instagram, considering there is no other way to fund the company. Plans to launch pro-photo filters and cloud storage faded after other apps that offered these subscription services failed to make enough revenue to survive.

This enhances Facebook’s portfolio greatly, considering its own social network does not push that many high-quality adverts. Instagram and videos are the two new focus points for Facebook, alongside figuring out how to monetise WhatsApp and Facebook Messenger.