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Big Business: Instagram Gets First Big Ad Deal


Instagram has inked its first major ad deal with an agency, and it’s big.

The photo- and video-sharing site is rolling out a paid advertising program with a yearlong commitment from Omnicom to spend up to $100 million, according to people familiar with the matter.

The arrangement means that users will start seeing ads in their streams from brands that work with Omnicom’s media and creative agencies, including Omnicom Media Group, the media agency network that spearheaded the deal, and creative shops within the holding company like BBDO, DDB and TBWA/Chiat/Day. Omnicom’s media agency network houses PHD and OMD.
Omnicom and Facebook, which bought Instagram for $715 million in 2012, confirmed the partnership but declined to comment on its terms. Instagram said it has a community of 150 million active users, with more than 60 percent from outside the U.S., and 55 million photos loaded daily.

An ad in a user’s stream will be controlled so that it stays present for an extended period — longer than a day, according to one executive — even if the user logs in or out. The ads, which could come in the form of static images or videos, are meant to be consistent with the quality of the content on Instagram. So rather than pumping out loads of content and buying and serving ads programmatically, buys will be manual and selective.

The deal cements and expands the paid advertising model that Instagram has been testing since late last year, when brands such as Michael Kors, General Electric, Levi’s, Lexus and Ben & Jerry’s posted their first ads to the mobile photo- and video-sharing network. The only targeting parameters in play were age and gender, information that was gathered from Instagram users’ Facebook profiles. Some of the ads garnered hundreds of thousands of likes and an influx of new followers for the brands.

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