Instagram to Begin Experimenting with Advertising Service

Since March, Emily White has been leading a team to develop a paid advertising program for Instagram. The photo-sharing service has been ad-free since the start, and may risk losing users when it adopts advertisements, especially from its large, young user base. White is working to establish relationships with brands, and to expand Instagram as a brand marketing platform. Yet it is unclear how advertisers and brands will pay for a service they use for free.

“As director of business operations, the 35-year-old Ms. White effectively is the new chief operating officer of Instagram, the point person charged with turning a billion-dollar acquisition that has never made a cent into a real business,” according The Wall Street Journal.  “Mr. Systrom, co-founder of Instagram, still makes the ultimate decisions, but it is Ms. White who is responsible for courting brand marketers and laying the foundation for advertising.”

She is tasked to find how to integrate marketing without threatening Instagram’s appeal. “We want to make money in the long term, but we don’t have any short-term pressure,” White said.

White reviewed all the aspects of business operations in the company. It now employs 50 people, up from 32 at the start of the year, with two people working on analytics and another four to assist in the managing of brand relationships.

“After years without ads, Instagram’s big risk is alienating its members — especially its large base of teen and young adults, who are coveted by marketers,” notes WSJ. “Too much overt marketing could clutter the service, undermining one of its strongest selling points.”

A brief backlash occurred in December when some Instagram users complained of a change in the app’s terms of service that implied user content could be turned into advertising. There are third-party services that brands can use to obtain permission to access user content, but Instagram is “not going to facilitate that,” said White.

It is unclear if companies will pay for a service that Instagram provides for free. Many, such as Nike and Lululemon, are currently running free campaigns on Instagram. Although Levi Strauss began a campaign using the service, Instagram helped the company set up the technology for free, and the app company sees the partnership as helping build value for Instagram among brands.

White and her team are looking at the potential of Instagram ads around the app’s Discover feature that promotes popular content, as well as a search function that lets users find images or themes, and avoid Facebook’s early missteps with advertisers (Instagram was acquired by Facebook in 2012). Some retailers are interested in Instagram products which allow images to link back to the retailer’s website.