Since the beginning of Instagram in 2010, the company has not profited in any way from any advertisements. In facts the company has been running for three years now, employs 50 workers, yet it does so without any inflow of money. How is this sustainable? Well if it was not because the company was bought by Facebook, sustaining a company like this one would have been very hard.
Facebook may have thought that by embarking on the billion dollar transaction of acquiring Instagram, they could somehow control competition and attract/retain more Facebook users if the two websites were compatible.
Many large companies are advertising on Instagram and are not charged at all. In fact some companies such as Levi Strauss, have run ad campaigns receiving technical support from Instagram and have not been charged a dime.
However, the time has come for change and of course, for more profit. Instagram COO Emily White met up with officials from Coca-Cola and Ford Motor Company among others to discuss the possibilities of adverting on the website. Ms. White is aware that the company must be cautious not to over-flood their users with advertisements as this may drive many away.
I personally think that it is a necessary move to start charging for advertisements. It does not make sense to provide support to companies that are making a profit, and not charging them at all for the benefit. Despite that Instagram needs to be extremely careful with their ad selling. They must make sure that it is simple for companies to advertise, yet they must be careful not to fill the website with too much campaigns. An excellent combination will be to make the ads' presence, big enough to be noticed, yet small enough to avoid them in order to limit clutter.