Instagram's ads are at odds with Instagram itselfNovember 6, 2013: 1:07 PM ET
Here's how to fix it.
By Ryan Bradley, senior editor
FORTUNE -- If you're an active Instagram user -- and odds are good that you are, as close to 100 million people check in with the photo sharing application at least once a month -- you have probably already started seeing images and videos pop up in your feed, posted by companies you may or may not already follow. Clothing and accessory maker Michael Kors (KORS) was the first, posting a photo of a gold watch laid on a table with coffee (or is it espresso?), multicolored macarons, and a polaroid of Notre Dame. The photo caption read "Pampered in Paris #MKTimeless." The outcry, based on user comments, was swift: "JUST STOP"; "I hate ads"; "This is super annoying" -- but also, in its first four hours more than 98,000 people "liked" the photo, and one commenter wrote "I have to say, this is very pretty and not obtrusive; I'm on board with Instagram ads atm [at the moment]."
The next ad I became aware of on Instagram was more interesting, because it was hardly an ad at all. The image was of a jet engine -- not an object I am or ever will be in the market for -- built by General Electric (GE). I follow GE on Instagram, and even assigned and edited a short story for our 2012 Fortune 500 issue about just how good the company is at Instagram, how fascinating its feed could be, how its images bring its now 154,000 users in and make them aware of the beautiful machines GE builds.
Beloved social networks like Instagram burrow into their users' lives and trade on sincerity -- the perception of sincerity gives Instagram its value; it's the thing that made it worth $1 billion to Facebook. The insertion of ads into this space is certainly polarizing and potentially disastrous. The surprising thing is that Instagram was already an astonishingly powerful platform for large companies to reach an interested audience. So why taint that relationship by muddying the waters with conspicuous advertisements?
The short answer is that Instagram is part of Facebook (FB), which is a publicly traded company and as such must face shareholder scrutiny if it does not figure out a way to make money. My suggestion is that Instagram (and Facebook) looks to make money by exploiting its compelling service to some of the biggest companies in the world.
Advertising is a business of discrete units: Ads exist in boxes or banners or airtime or, sometimes -- more and more often now -- as articles (a.k.a. "content") with some kind of label that usually reads "Sponsored." Ads are deemed effective based upon still more discrete units: likes, clicks, viewership. All these hard numbers are good for filling up spreadsheets and making selling stuff to people seem scientific when it really is not. Facebook, Instagram, and Twitter are platforms. On these platforms we share all sorts of information with individuals and -- this is crucial -- companies, too.
We "interact with brands" on all these interfaces the same way we do with real people; real people are operating companies' accounts. Sometimes it is awkward, sometimes it is stupid, sometimes the person employed by the company to operate its social media is after nothing more than a lot of likes and retweets, not actual customer service, and it cheapens the entire experience and makes the brand look dumb. This is not entirely a social media editor's fault, though, because those likes and retweets are the discrete units that tell the people in charge how good they are at their jobs, and the people in charge don't really understand how the Internet works. What they understand are the discrete units that fill up the spreadsheets. A "like" is a binary decision that carries a whole range of meaning; sometimes a like or a fav or retweet can be ironic, sometimes it can even express hatred.
The discrete unit model of advertising is flawed and very old-fashioned. A better model is staring us in the face. What if, instead of awkwardly transforming themselves into platforms for advertising, these social media networks sold themselves for what they already are: a service. Many much smaller, more exclusive networks already go this route, charging users a fee. This isn't necessary, or desirable, for companies with user bases as big as Facebook's and Instagram's and Twitter's. Instead, why not charge other companies for help and instruction on how to use the service more effectively, not as advertisers, but as (corporate, deep pocketed) users? Chris Malone, an author and consultant who studies how brands interact with customers, told me recently that "Facebook is totally blowing it ... they have the best relationship management tool in the world. Why not charge companies to interact with their customers in a meaningful way -- solve their problems, chat with them ... " or simply post interesting photographs without dressing them up as advertisements. I suspect that both brands and users will like this model, unironically.