The advertising industry is buzzing as Instagram has signed a one-year contract with advertising agency Omnicom, likely in a bid to expand its sponsored ads to more mobile device users.
Instagram is an online photo-sharing, video-sharing and social networking service. The company launched its service in October 2010 and in April 2012, Facebook acquired Instagram for $1 billion in cash and stock.
Instagram is a very popular online service with more than 150 million active users, with more than 60 percent users from outside the U.S. Instagram says that there are around 55 million photos updated on its service on a daily basis.
The latest deal with Omnicom means that ads from brands and companies that work with the advertising company's media and creative agencies will be streamed and exposed to Instagram users, including Omnicom Media Group, the media agency network that handled the deal, as well as creative shops inside the holding company such as BBDO, DDB and TBWA/Chiat/Day.
"This is an exciting new chapter and we're looking forward to the great creative content that comes out of this partnership," said Jim Squires, director of market operations at Instagram, in a statement shared with CNET. "Our teams are going to work hand in hand to develop and execute campaigns that provide people with amazing imagery -- and drive meaningful business results for advertisers."
Omnicom is one of the biggest marketing agencies with over 5,000 clients. The details of the deal between Instagram and Omnicom remain undisclosed, but it is suggested that the advertising agency will spend around $100 million on Instagram ads for its clients.
Instagram has been ad-free for around three years since its launch. However, in November 2013, the company kicked off its advertising initiative with a sponsored photo from Michael Kors that was shown only to the U.S. users. In December 2013, Instagram said that sponsored photos from Levi's and Ben & Jerry's have reached over 7 million people in just over a week.
The recent deal with Omnicom means that Instagram will show its members magazine-quality advertisements that they will enjoy.
Squires says that the latest partnership with Omnicom will not affect Instagram's advertising strategy. He adds that Instagram users will continue to see a limited number of high-quality photos and videos from select brands that already have a presence on the service. However, some market observers believe that ads may deter users from using Instagram.
