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That Instagram-Omnicom Deal Is Actually Worth $40 Million

Popular mobile platform inks first agency partnership

Michael Kors

The Instagram-Omnicom deal that has the digital ads space buzzing is actually worth close to $40 million, Adweek has learned.

Ad Age yesterday reported that the contract totaled about $100 million, while Bloomberg earlier today pegged it at $50 million. Both estimations were high, according to a source close to the situation, who says the agreement is essentially a volume inventory buy that will include Instagram's current static promos as well as other emerging products.

Facebook-owned Instagram is expected to roll out video ads at some point, just as its parent will likely start featuring auto-play spots in users' news feeds relatively soon.

Omnicom, a major holding company that's merging with Publicis Groupe, literally has scores of big-brand clients, including Nissan, AT&T, Pepsi and Bud Light, so it's looking to establish a strong relationship with the growing mobile-social platform that now counts 150 million active users. 

Instagram only started displaying ads in November 2013, and it has been tested by brands such as Michael Kors and Ben & Jerry's. With the Omnicom partnership, it is guaranteed significant ad dollars. Due to the fact that Facebook spent $1 billion on Instagram two years ago, CEO Mark Zuckerberg and Co. must feel assured by the development.

Multiple people close to the situation have described the marketing partnership as not "your typical agency deal." Instagram is controlling the advertising process and guarding what types of brands are allowed to market in the space.

In fact, Instagram has turned down potential advertisers because their concepts don't fit the platform, according to industry players. The Omnicom deal was Instagram's first with an ad holding company, but others like WPP are interested, sources said. Instagram is working closely with Omnicom's creative agencies to vet the content and come up with best practices for advertising on the platform, a source said.

"Omnicom shares our passion for and understanding of the mobile Instagram community," said Jim Squires, Instagram's director of market operations, in an email. "Along with their clients, they’ll help to continue to set a high bar for creative work that inspires people."

Instagram's sales team is pitting their supposed benefits against Twitter, where users scroll more quickly past Promoted Tweets, a source said. There are fears that advertising could turn users off.

"[The Omnicom deal] doesn’t change our advertising strategy moving forward—people will continue to see a limited number of beautiful, high-quality photos and videos from select brands who already have a strong presence on Instagram," Squires said.

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