Photographer: Andrew Harrer/Bloomberg

Instagram Puts Ads on Stories Feature as Users Reach 150 Million

  • Instagram steps up competition with Snapchat ahead of IPO
  • Stories was a feature copied from Snapchat application

Instagram will start to introduce advertising to its stories feature as it becomes more popular, stepping up competition with Snap Inc.

Facebook Inc.’s Instagram said it now has 150 million daily users on the stories feature of its photo-sharing site that was inspired by a popular Snapchat product, which broadcasts short videos that disappear after they’re viewed, or after 24 hours. Instagram’s number for stories matches the statistic Snapchat gives for its total daily global audience.

Instagram will start to slip in ephemeral ads between stories from friends, turning the popular feature into a moneymaker for Facebook. While Snapchat also advertises between stories, it’s still building up the infrastructure that Instagram has to measure and track ads and link them to demographic data, which can attract more marketers.

“We’re pairing this new format with a powerful advertising capability, so they can target the people that matter to them,” said James Quarles, vice president of Instagram business. “That is what is differentiating and sets us apart.”

Instagram will start the ad test in a few weeks with 30 clients, including Nike, Airbnb and Capital One. Quarles pitched the feature to advertisers last week at the Consumer Electronics Show in Las Vegas.

Advertisers “love vertical video and they love sound on,” Quarles said, noting that 70 percent of stories watchers do so with sound. “That’s where stories, from a format standpoint, is so interesting to them.”

Snapchat was a pioneer in advocating for vertical video, which takes up the entire screen on a mobile phone, as opposed to horizontal video designed first for television screens -- the primary format in Facebook’s news feed. Instagram’s rival, owned by Snap Inc., is gearing up for an initial public offering, planned for as soon as March this year.

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