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Shares in Facebook (FB) Jump on News of Instagram Ads

By  +Follow October 4, 2013 5:31AM
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Shares in social media giant Facebook (FB) spiked Friday on news that it would start selling ads on the photo-sharing service Instagram. News that Facebook would begin monetizing their $1 billion acquisition from last year pushed shares up almost 3.5 percent.

Instagram to Ease Users In

Instagram assured users in a blog posting that it would make efforts to prevent the new ads from interrupting their users’ current experience.

“Our aim is to make any advertisements you see feel as natural to Instagram as the photos and videos many of you already enjoy from your favorite brands,” Instagram said on the blog. “After all, our team doesn’t just build Instagram, we use it each and every day. We want these ads to be enjoyable and creative in much the same way you see engaging, high-quality ads when you flip through your favorite magazine.”

”Seeing photos and videos from brands you don’t follow will be new, so we’ll start slow. We’ll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands that are already great members of the Instagram community,” the blog post continued.

The $1 billion deal to purchase Instagram in April of last year appeared peculiar to many at the time, coming as Facebook was ramping up for its IPO and appearing to buy a steep premium on the small company’s value. However, the long-term strategy may appear clearer after today’s announcement.

Mobile Presence a Focus With Pending Twitter (TWTR) IPO

Many analysts believe the push to increase ad revenues through Instagram is a positive move for Facebook.

“There just continues to be momentum, continues to be good news,” said Benjamin Schachter, an analyst at Macquarie Securities USA Inc. “Even though the Instagram news was somewhat expected over time -- we’ve been waiting for the announcement this year, and yeah, it’s going to be a positive.”

The move comes one day after Twitter ($TWTR) opened its confidential IPO. News outlets have compared the two companies, with a particular focus on mobile ad revenues, noting that 65 percent of Twitter’s ad revenue was coming from mobile as compared to just 41 percent of Facebook’s. As more and more users shift to mobile, Facebook’s ability to monetize ads in that area is believed to be crucial, and Instagram could ultimately prove to be an essential piece of that puzzle.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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30 Oct 14 21:10:13
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30 Oct 14 20:53:37
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Hotpage
30 Oct 14 20:53:37
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30 Oct 14 20:52:30
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30 Oct 14 20:52:30
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30 Oct 14 20:50:20
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vasquez randi
30 Oct 14 20:48:41
RT @JoeBabe123: Someone is spreading a rumor on $FB that $MYEC will be pumped tomorrow.... I hope not.... We don't need to be pumped
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30 Oct 14 20:48:17
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Brad Wood
30 Oct 14 20:48:12
RT @JoeBabe123: Someone is spreading a rumor on $FB that $MYEC will be pumped tomorrow.... I hope not.... We don't need to be pumped
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30 Oct 14 20:43:33
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30 Oct 14 20:43:17
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30 Oct 14 20:39:37
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30 Oct 14 20:36:12
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30 Oct 14 20:34:58
RT @ashleyflexing: @TyTooHollywood Yass 😊 $fb
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30 Oct 14 20:33:51
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Dave Kelly
30 Oct 14 20:30:37
RT @afmarko99: Twitter Vs Facebook An Advertising Inflection Point http://t.co/paKjGIZqYs $TWTR $FB $GOOG @EVplusEV @evanmedeiros
Joseph Nigro
30 Oct 14 20:28:55
Someone is spreading a rumor on $FB that $MYEC will be pumped tomorrow.... I hope not.... We don't need to be pumped
Leading Signals
30 Oct 14 20:26:07
$FB Facebook has reached a glass ceiling, expect further increased spending with diminished returns. There just isn't enough people. #Sell
Maleah
30 Oct 14 20:13:42
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Mark Donatelli
30 Oct 14 20:13:24
RT @ryanmcraver: Instagram's First Video Ads Appear From Disney, Activision, Lancome, CW, Banana Republic $FB http://t.co/qqXf8SzTQU
jatinam
30 Oct 14 20:07:44
RT @IBDinvestors: LinkedIn is booming in one key market that Facebook and Twitter can't enter http://t.co/Kd4vdFk8Yv $LNKD $FB $TWTR $AAPL
Zacary Mcreath
30 Oct 14 20:07:42
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30 Oct 14 20:01:47
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30 Oct 14 20:00:00
Tickers trending on TWTR in last 1 hour AUDUSD $BAB $BABA $FB Dow Jones http://t.co/dISFzJ8qgR
Consestimate
30 Oct 14 19:57:24
Citigroup legal costs up by $600m. $C, $FB. http://t.co/ud6vSIRgUO http://t.co/tydBrbIDSh
Ben Franklin
30 Oct 14 19:53:41
RT @tim: How Facebook accounts for its WhatsApp buy: $2bn for users, $448m for brand, $288m for tech, $15bn in "goodwill". $FB http://t.co/…
$FB Stock Watch
30 Oct 14 19:52:05
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30 Oct 14 19:52:04
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30 Oct 14 19:52:04
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30 Oct 14 19:52:03
Facebook Inc (FB) To Continue Aggressive Spending http://t.co/QiU5G9crtB $FB
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30 Oct 14 19:42:35
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US Banking News
30 Oct 14 19:42:00
Facebook Stock Rating Reaffirmed by Credit Suisse $FB http://t.co/KRsk6f71ya
jedimarkus
30 Oct 14 19:41:01
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30 Oct 14 19:39:01
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30 Oct 14 19:39:01
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30 Oct 14 19:29:31
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Ryan M Craver
30 Oct 14 19:28:35
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30 Oct 14 19:26:06
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30 Oct 14 19:10:59
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Michael Allen
30 Oct 14 19:07:58
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30 Oct 14 19:01:40
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By  +Follow October 4, 2013 5:31AM
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