Is Facebook’s Bolt Teaser the Start of App Ads on Instagram?

Analyst says installs are 'inevitable'

Facebook's teasing of Bolt, a new app on Instagram, could mean that a new photo-sharing app is in the works, a new ad product is coming to Instagram or both.

When Instagram users got the promotion for Bolt, the message looked like an ad that could easily be used by other app developers.

Facebook wouldn't say what Bolt was, but it's likely the next app idea out of Mark Zuckerberg's crew, and it's getting a little push on sister app Instagram. Bolt promises “one tap photo messaging.”

Of course, Facebook has no shortage of messaging and photo-sharing options, including Slingshot, Messenger, Instagram and WhatsApp, as the company pushes a hyper-specialized app strategy—one app for every activity. Facebook watchers noted that Instagram could be fitted for app-install ads, like the one that showed off Bolt.

"Whether Bolt was an app-install ad test or not, we assume that it is inevitable that Facebook will roll out app-install ads on Instagram," said Robert Peck, an analyst at SunTrust Robinson Humphrey.

A source said the message was not an app-install ad. "It's an in-app communication vehicle," the source explained.

Instagram, which Facebook bought for $1 billion in 2012, is taking a slow approach to advertising. The company and its CEO Kevin Systrom are super-selective of the types of brands they allow to advertise.

Every ad is individually vetted and run through quality control, as creative teams inside Instagram work with creative agencies to make sure style guidelines are met. The ads are meant to evoke glossy magazines. Instagram doesn't even provide links that send people to apps, websites or other direct response marketing.

App installs would be a big departure, but a lucrative one for Instagram. About $5.1 billion of Facebook's total revenue of $7.9 billion last year came from selling app-install ads, according to Peck.

Facebook is a little defensive about how much of its money comes from app installs as it tries to increase the quality and relevance of brand-focused advertising on its main property. Still, Facebook's ad partners and buyers expect that it will open Instagram to more digital advertising beyond the sponsored images that brands promote now.

Socialbakers CEO Jan Rezab said Facebook could even include Instagram in its Audience Network mobile ad platform. In April, Facebook launched the Audience Network, which serves customized ads to app-publishing partners.

"Why would Facebook build this dedicated ad system unless it's for its biggest asset?" Rezab said.

Instagram app-install ads could be another moneymaker for Facebook—$500 million a year in sales, according to Peck.

Peck estimated that Instagram could show eight app-install ads a month to its 250 million users. If that leads to 10 million downloads at $4 a pop, that’s $40 million a month, according to Peck.

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