Omnicom Strikes a Deal with Instagram

Omnicom Strikes a Deal with Instagram in First Major Ad Partnership

Posted by Sheila Shayon on March 10, 2014 05:37 PM

Ads on Instagram are about to get much more invovled thanks to a reported $40 million deal inked between Instagram and ad agency Omnicom (brandchannel's parent company) whose clients include Nissan, AT&T, Pepsi, Bud Light and more.
The agreement, which is essentially a "volume inventory buy that will include Instagram's current static promos as well as other emerging products," throws open the door for Omnicom brands to show promotional videos and pictures to Instagram users, part of Facebook CEO Mark Zuckerberg’s push to garner increased revenue from its mobile users who now comprise more than half of the social network’s ad revenue, according to Adweek.
Omnicom, which is awaiting regulatory approval for its merger with Publicis Groupe, forming the largest agency in the world, is set to fully exploit the mobile-social platform's growing ad business, which it
introduced late last year with brands including Michael Kors, Ben & Jerry's and General Electric.
Sources cite the new deal as not "your typical agency deal," with Instagram in control of the ad process and deciding which brands can play.
"Omnicom shares our passion for and understanding of the mobile Instagram community," said Jim Squires, Instagram's director of market operations. "[The Omnicom deal] doesn’t change our advertising strategy moving forward—people will continue to see a limited number of beautiful, high-quality photos and videos from select brands that already have a strong presence on Instagram."
Instagram users will start seeing ads from Omnicom Media Group, the media agency network behind the deal, as well as in-house creative shops including BBDO, DDB and TBWA/Chiat/Day. Publicis’ Starcom MediaVest Group is also in talks with Instagram.
"This is another example of the media becoming the message," Daryl Simm, CEO of Omnicom Media Group, told Ad Age. "It's a high-quality engagement with the consumer as opposed to a quick hit. It's that conjecture that makes it so appealing to us,” and for Instagram "it's a real development in terms of the paid advertising opportunities they're offering."
A recent report from L2 found that Instagram "outshined" competitive social platforms in 2013, in particular with prestige brands. “Instagram has demonstrated more traction than any other platform in 2013, and it registered the strongest year-on-year growth among mobile apps,” L2 founder Scott Galloway said in the report. “It's an obvious choice for consumer brands.” 
eMarketer reports the global mobile ad market grew 105.9 percent last year, reaching $18.16 billion, up from $8.8 billion in 2012, while the US mobile ad market grew by 122 percent to $9.69 million during the same period.
Still, critics have expressed some caution as the app could be taken over by ads, spoiling user experience, as VentureBeat notes. “Although Instagram continues to reassure everyone that the quality of the ads will remain consistent with the quality of user-generated content, only time will tell if these ads will be beautiful artistic snaps with subtle messaging or will turn users off.” 
Source: http://www.brandchannel.com