Big Brands Want Ads On Instagram, But Facebook Is Focused On Growth For Now

Next Story

Take The H.E.L.M. 2.0 Is A Competition Designed To Encourage Startups To Move To NYC

Facebook says that there are no plans for now to add advertising to Instagram, even though advertisers are approaching them, CEO Mark Zuckerberg said today during the company’s Q1 earnings call. Adding ads could end up stunting Instagram’s rapid growth. He said, more than once during the call, that Instagram is currently growing at a faster rate than FB did at the same age, and it now has 100 million users.

“They’re really doing well and growing quickly and that is the right focus for them,” Zuckerberg said. “They have the opportunity to…build community. I am really optimistic about the business and the opportunities.” But he also noted that “big brands are approaching us” about doing more on the platform — perhaps commercializing more, is the implication here. Instagram is already a pretty substantial marketing platform.

Facebook faced an outcry last year when Instagram updated its terms of service, with many concerned about how Instagram would get commercialized, specifically around selling ads against users’ photos. The company ended up reverting back to its original terms. At the time, Instagram co-founder Kevin Systrom noted,

“Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.

On one hand, the decision to hold off on adds on Instagram runs counter to how Facebook has been running the rest of its mobile business. The company has been focusing a lot on mobile advertising, which now makes up 30%, or $375 million, of all of its advertising revenue. For now, Facebook seems happy instead for Instagram to provide a complement to the increasing commercialisation on Facebook’s main platform, which includes lucrative app install ads.

On the other, there’s still a lot of evidence here that points to Instagram still lacking the scale to be an effective ad platform for the company. While Instagram now has 100 million users, mobile active users for Facebook are now at 751 million.