Facebook’s Instagram 'signs $50m advertising deal' with Omnicom

By Sooraj Shah
10 Mar 2014 View Comments

Instagram, the mobile photo-sharing app, has signed a $50m (£30m) advertising deal with US communications firm Omnicom Group, as Facebook, which acquired the app in April 2012, attempts to boost sales from mobile users.

The agreement will enable clients of Omnicom, such as Pepsi, Microsoft and AT&T, to show promotional video clips and pictures to Instagram users, according to Bloomberg sources.

Further reading

Facebook CEO Mark Zuckerberg has set his sights on increasing revenues from mobile advertising after the social media network's initial struggles led to its share prices plummeting after the firm first floated on the stock market.

Facebook's focus on mobile has yielded results, with revenue jumping 63 per cent to $2.6bn (£1.6bn) in the final three months of last year. Revenue from advertising was reported at $2.3bn (£1.4bn), and of those revenues, 53 per cent stemmed directly from Facebook's push into mobile advertising on smartphone and tablet apps.

Now the firm wants to exploit Instagram, which according to marketing research firm GlobalWebIndex, gained 23 per cent in active users in 2013 - the biggest jump of any social media application, including Reddit and LinkedIn.

Instagram, which was acquired by Facebook for about $1bn in cash and stock, has already rolled out advertising in the past few months, but the new deal will lead to more photos and videos from brands being viewed by users, and allow the social media platform to profit in return.

"Omnicom shares our passion for and understanding of the mobile Instagram community," said Jim Squires, director of market operations at Instagram in a statement to Bloomberg.

"Along with their clients, they'll help to continue to set a high bar for creative work that inspires people," he continued.

Squires added that Instagram's advertising strategy won't change, meaning that only a "limited number" of photos and videos from selected brands who "already have a strong presence on Instagram" would be shown on the app.

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