Industry Reaction: Facebook Buys Instagram - What's In It For Ads?

Considering that it’s preparing for what may be the most hugely anticipated IPO in a decade, Facebook shook off its “quiet period” shackles and announced the acquisition of photo-sharing application Instagram for $1 billion. CEO Mark Zuckerberg said from his Facebook profile: “This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users.” Read it. So with so much audience available through Instagram, will there be an advertising play in its future?

AdExchanger reached out to a selection of executives and asked:

“Even though Instagram has no business model associated with advertising currently, what’s your take – what does (or what will) Instagram’s acquisition by Facebook mean for advertising?”

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James Borow, CEO, GraphEffect

“This is a big, big deal. With this acquisition Facebook just cemented its place as the largest mobile ad network. Between its mobile offering and Instagram, Facebook could control more inventory than anyone else in the mobile space. This will have a huge impact if Facebook decides to expand its ad offering outside Facebook proper. This could potentially lead to sponsored stories within Instagram, effectively creating the start of Facebook’s AdSense killer, which would be news welcomed by many advertisers.”

Steve Katelman, EVP Global Strategic Partnerships, Omnicom Media Group

“This world is changing much faster than the people on the front lines realize. The fact that Instagram was sold for more than the valuation of the New York Times is a strong reminder that the media landscape has forever changed. That said, it was probably a smart buy.”

Jim Payne, CEO, Mopub

“Facebook’s acquisition of Instagram is more supporting evidence – if you needed anymore – demonstrating the importance of mobile. Even the world’s largest social network felt the need to extend their reach into the community of influential and active smartphone users. As people increasingly migrate to app experiences while they are on the go, advertisers and marketers will need to adjust their approach commensurately. I look forward to the richer, more engaging and highly targeted ad experiences that are facilitated on mobile by the combination of mature, scalable ad technology and a passionate, engaged user population.”

Bob Walczak, Strategic Advisor, Bump Equity

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“The Instagram acquisition works to ensure that Facebook remains relevant in the photo social market. The Pressure felt from Pinterest’s meteoric growth made visible a weakness to Facebook’s platform. But Facebook buying Pinterest would not have made sense as there is no integration point, what makes Instagram fit is the fact that it is solely a mobile solution.

Facebook is already a dominant mobile platform, via browser and applications, but this is primarily because they’ve extended their platform to mobile. What I believe Facebook has failed to do on mobile is innovate and deliver a platform built for the social aspects of a mobile device. Enter Instagram, who combined all of the communication aspects of the device enabling an elegant solution for Facebook to make social.

This is a big move for Facebook so close to IPO, I believe it illustrates Facebook still has room to grow which makes it a buy and hold for investors (if there was any question). I also believe the acquisition shows that Mark Zuckerberg is ready to do more then just add to the platform but actually extend into non-conforming areas of the social ecosystem with new solutions.”

Lucy Jacobs, COO, Spruce Media

“The Facebook acquisition of Instagram is not about monetization it’s about social sharing, of which photos are core functionality. The premise of Facebook is as a social technology platform that power’s the world’s connectedness. Facebook is focused on building and engaging communities and ultimately amplifying messaging through paid media. Photo sharing and mobile engagement is a core functionality of Facebook. Instagram is an app focused around sharing pictures with friends, a perfect fit for Facebook’s DNA.

Instagram also plays into Facebook’s focus on mobile engagement and ultimately monetization of the fastest growing channel for Facebook. Facebook was initially centered on web browsers but are increasingly realizing the need to adapt to mobile where up to 50% of Facebook’s impressions occur. The Instagram acquisition helps Facebook to further embrace mobile consumption and further engage their users in this growing channel.

Facebook has been disruptive and innovative around advertising. Facebook is not focused on advertising it’s centered on building an engaged community who then shares brands, which are meaningful to them with their friends. Facebook ads stem from the content users are engaging with through sponsored stories and page post ads known as “word of mouth marketing at scale.”

Anne Frisbie, VP & Managing Director, North America, InMobi

“Facebook’s acquisition of Instragram shows the importance and power of mobile application developers. Mobile developers continue to improve consumers’ lives, and are driving the hypergrowth of mobile towards becoming the primary media connection device for the planet. Instagram delivers a beautiful and socially empowering mobile experience, and it is great to see mobile app developers like Instagram rewarded for their valuable contributions. Facebook’s increasingly becoming more focused on it’s mobile strategy, enabling developers to continue to innovate and deliver ever greater mobile consumer experiences. Mobile will drive a majority of consumers connected lives in the future based in large part on the value that application developers deliver. Facebook’s billion dollar acquisition of Instagram is another sign of the increasing value and importance of mobile. No matter how successful you are already, it is critical to ensure that you are well positioned in being able to reach and engage audiences at scale in mobile.”

By John Ebbert

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