Relax, Instagram fans. Ads may not be a bad thingSeptember 11, 2013: 5:00 AM ET
Facebook is slowly fine-tuning its ads business for the better, and that will likely reflect on Instagram ads coming next year.
FORTUNE -- Like it or not, Instagram ads are coming. But the change may not be as bad as you think.
A report from the Wall Street Journal earlier this week revealed Instagram could introduce advertising within the next year. Since its launch in 2010, the photo-sharing app has seen incredible success. Nearly 150 million people share photos through Instagram each month, more than triple the number of users Instagram had when Facebook acquired it for a reported $715 million last year.
Advertising certainly makes sense for the product, particularly given Facebook's ownership. The social network itself relies primarily on desktop and mobile advertising for revenues, with the latter rapidly expanding. Indeed, 41% of the social network's ad sales now come from mobile, up from the 33% Wall Street had projected for its most recent quarter. And according to eMarketer, Facebook's share of global mobile Internet ad revenues will reach 16% in 2013, up from just 5% last year.
Ever since Facebook (FB) began rolling out ads several years ago, I've been skeptical. Many ads on the right side of the desktop experience either seemed completely irrelevant or downright comical. For a good stretch of time in late 2011 and early 2012 for instance, I was served this "Hot and Steamy" Sponsored Story plugging an enzyme bathhouse for gay men (see right). Facebook and the advertiser got the gay part right -- just not the enzyme baths or taste in men. (Excessive tattoos aren't my thing, thank you very much.)
But in the year-and-a-half since, I've noticed their overall ad efforts have become much more relevant: shoe site ads with shots of boots I'd actually buy or ads plugging running clothes because I often upload my Nike+ running information. When I downloaded an eBay company app back in February, I was served up mobile ads in my Newsfeed to also try the company's eBay Now same-day delivery app. When I was shopping for new work clothes more recently, a large J. Crew ad popped up in my Newsfeed with a 10% off coupon code. Not only was that finally incentive enough to click on my first Facebook ad ever, but after I made an in-store purchase, I returned to Facebook and noticed that one of the items I'd purchased was the very same Ludlow Italian wool suit jacket featured in the ad. Coincidence? I think not.
Still, that's not to say I love Facebook ads -- having them pop up so frequently, particularly on the desktop can be a nuisance -- just that the social network has gotten much better at targeting them toward users' tastes. And I'm willing to live with them because Facebook has to make its money somehow, and I'd rather not have to pony up for a monthly or annual subscription.
The same sort of accuracy in Facebook ads could be used in Instagram advertising, which could reportedly find its way into the app's Discover feature and search function. If that's the case, I might argue, it wouldn't so bad for the user experience -- just perhaps their wallets.