SAN FRANCISCO -- If you're beginning to observe more ads on Instagram, it's all part of Facebook's plan. As the world's biggest social network, Facebook, has firmly built their advertising industry to develop into the world's second-largest digital ad platform next to Google. Currently, they're considering other ways to gain more money from brand-new services like Instagram, the mobile photo-sharing app that it has acquired for $1 billion in 2012.
Instagram has also announced it has over 400 million monthly users, exceeding the 300 million who use the rival social networking site Twitter. Although Facebook has been presenting Instagram ads gradually - to refrain from annoying its users by overwhelming them with commercial themes - the company said that in September, it would support more sorts of ads, such as longer video spots and on the photo-sharing service.
With those fresh layouts, CBS news reported that Evercore ISI analyst Ken Sena estimates Instagram could come up with more than $250 million in profit for the current quarter. And according to research firm eMarketer, businesses will allocate about $600 million on Instagram ads this year - and about $1.5 billion in 2016.
Facebook doesn't reveal how much of its profit comes from Instagram. The company has beaten Wall Street estimates on Wednesday by announcing the third-quarter net income of $891 million, on an income of $4.5 billion. Earnings were up 11 percent, while profit grew 40 percent from the same cycle a year earlier.
Experts say that the company has a big, idle capacity in its developing stable of apps and services, many of which operate distinctly from the main Facebook social network. That consists of the WhatsApp messaging app and Oculus VR, which makes virtual reality gear and Instagram. In a current remark to investors, RBC Capital Markets analyst Mark Mahaney named those services as "greenfield opportunities" for Facebook
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However, experts advise that Facebook must be cautious as it presents new sets of advertising, so it doesn't surprise or upset users. Williamson said that the company worked meticulously with advertisers to make sure that the first ads on Instagram "met a high bar" for esthetics and artistry.
