Instagram Signs $100M Ad Deal With Omnicom

Instagram inks ad deal with Omnicom worth up to $100 million, deal gives Omnicom media and creative agencies access to Instagram paid ad program

Instagram Ads Omnicom deal

Instagram Ads Omnicom deal

Facebook which bought photo and video sharing site Instagram for $715 million in 2012 is rolling out a massive paid advertising program. According to AdAge, Instagram’s major deal has happened with one of the largest advertising groups in the world, Omnicom with a year long commitment.

With this new deal in place, Instagram’s 150 million active users will start seeing ads in their streams from brands that work with Omnicom’s media and creative agencies, including Omnicom Media Group, and creative shops within the holding company like BBDO, DDB and TBWA/Chiat/Day.

Will this mean Instagram users who upload 55 million photos daily will be spammed by the photo and video ads?

Clearing the mist over the advertising strategy, Jim Squires, director of market operations for Instagram said that 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.

For users on Instagram, these ads, which would be controlled so that it creates more eye balls, will come in the form of static images or videos that are meant to be consistent with the quality of the content on Instagram. So for now serving ads would be manual and selective rather than pumping ads programmatically.

To keep the serenity of Instagram, the company is working with a “very limited number of long-term partners.”

However, there are rumours that Publicis Groupe’s Starcom MediaVest Group is also in talks with Instagram for such a deal. While both the companies have chosen not to comment on it but then Omnicom and Publicis are planning to merge in the coming months.

The latest deal with Omnicom comes after Instagram spent the last year experimenting with advertising from brands such as Michael Kors, General Electric, Levi’s, Lexus, and Ben & Jerry’s.

These small experiments had been positive as Facebook had revealed that there was a 32% incremental lift in ad recall per campaign for people who were repeatedly exposed to a particular campaign versus control groups. The findings reflect only about the campaign of Levi’s, and Ben & Jerry’s.

Levi’s also reached 7.4 million people during a nine-day period, targeting consumers aged 18 to 34. Ben & Jerry’s reached 9.8 million people in the U.S. over eight days, targeting people aged 18 to 35. Levi’s that had 155K followers on Instagram also saw a jump of about 20% in its follower count since the ads started running. While it is tough to determine the ROI but the ads were effective because Facebook kept meticulous control of the quality of the ads. A principle that could be challenging in future with many advertising players coming on board.

With Facebook now being a mobile first company holding 16.91 percent of all worldwide mobile ad spending in 2013, 16.4 percent of the US mobile ad market would be tested with this deal on Instagram. While video ads can be the key here but will it be able to control the quality of ads, is something only time will tell. Till then it is good news for marketers to reach out to their audiences on mobile, a device that is rapidly turning into a primary device for the world.

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