Seeking Alpha

Instagram strikes first major ad agency deal

  • AdAge reports Instagram (FB -1.5%), which only began showing ads last fall, has scored a year-long commitment from top ad agency Omnicom (OMC -0.1%) to spend up to $100M. The magazine also reports Instagram is talking with Starcom MediaVest, another leading agency.
  • Instagram has confirmed the tie-up, but not its specifics. "Our teams are going to work hand in hand to develop and execute campaigns that provide people with amazing imagery."
  • The mobile photo-sharing platform has been cautious with its efforts to monetize its ~180M MAUs. Select brands and their agency partners are currently able to buy photo/video-based ads that appear in a user's stream, but the ads have to meet Instagram's stringent quality standards.
  • Previous: Instagram chief focused on discovery, international growth, ecosystem
From other sites
Comments (22)
  • MichiganTrader
    , contributor
    Comments (73) | Send Message
     
    Big news!
    7 Mar 2014, 02:46 PM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    meh.
    7 Mar 2014, 03:02 PM Reply Like
  • TGP59
    , contributor
    Comments (71) | Send Message
     
    "meh."

     

    That's all @monfrere, minor indifference? I thought for sure you'd have some negative opinions on this, perhaps how it improves your short thesis...I'm disappointed, but have no doubt you'll be back soon.
    7 Mar 2014, 04:29 PM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    Thanks for being a fan TGP. 100M to Facebook is not material and especially from Omnicom who represents thousands of brands. This is written as if it is a big deal, but really it's not material. Hence "meh". Have a great weekend!
    7 Mar 2014, 05:01 PM Reply Like
  • Hoang6
    , contributor
    Comments (345) | Send Message
     
    Cool, it's time for other college drop-outs to build clones with NO AD, and run it for several years! This is how things work!
    7 Mar 2014, 04:02 PM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    Just Surface scratching...MORE to Come !

     

    Well done Zuck on that "bad" Instagram investment in 2012 who at the time of purchase had 15mm users and now has 150mm .

     

    Instagram users produce 55 million photos / DAY with 1.2 BILLION Likes and 60% of this population is based Outside the U.S. !

     

    I guess it's cool to claim indifference when you're hit by a Mack Truck !
    7 Mar 2014, 04:11 PM Reply Like
  • jorde
    , contributor
    Comments (16) | Send Message
     
    FB = $
    7 Mar 2014, 08:48 PM Reply Like
  • thecooler
    , contributor
    Comments (21) | Send Message
     
    The FB/Instragram ad deal represents more than most will realize.

     

    Omnicom and Pulicas just got EU approval for merger...between the two they are the largest media buy organization in the world now. That's roughly 500 Billion in total annual ad spend they do on behalf of the world's largest companies.

     

    This is not an Omnicom decision...this is the decision of the companies they represent (Coke, MCD, Nissan, J&J, Verizon and the list goes on). The collective power of Omnis' spend gives them significant leverage for media buy.

     

    100MM dollar deal is nothing in terms of the world of FB revenues, but the more important aspect of this deal is the pedigree of companies that realize the power of advertising through the Instagram platform Omnicom reps.

     

    In summary, you can hate the game, but don't hate the player. FB is here to stay. The only question is how much of a premium will major advertisers pay for ad placement as Instagram won't want to disrupt the user experience too much?
    7 Mar 2014, 10:36 PM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    With all due respect, I dont think you ever knew a media buyer. They will try anything once and push their clients to spend money. It's their job. The client in turn will try anything. The test is whether the amount grows 18 months from now. Facebook's test time is nearing an end. We'll see how the numbers pick up in the next 3 quarters.
    8 Mar 2014, 09:14 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    seems like some people here keep extending the success of FB from yesterday to now 3 qtrs to 18 mths.
    Quite humorous how some will say anything just to keep their unpopular dialogue going.
    8 Mar 2014, 05:28 PM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    Bahamas, it would be very helpful if you clicked "reply" on the message you'd like to reply to. You have 1300 comments, it's time.

     

    My time frames were meant to explain the industry and how it works. People started spending real money with Facebook about 12-18 months ago, so now we'll start seeing if they feel like that year worth of money was valuable. They can choose to spend more, or choose to spend less. That will play out in the next 3 quarters.

     

    For Instagram, this is the first test. It is a 12 month test and then they will decided if they feel like that campaign was successful and invest more or less. That will take 12months plus a little time to play out, so something like 18 months.

     

    I hope you find that amusing. I do find it very telling that you call my dialog "unpopular". It is clear that you came here with an idea and just hope that everyone on the boards will tell you how smart you are and set off little firings of serotonin. I'm hear to present my case and have people tell me I'm wrong. People have yelled at me, told me the market is moving against me, insulted me, and made fun of me... but no one has presented an actual, well thought out, deliberate statement on why my assumptions are wrong or why FB is worth $200B. I welcome you to join the conversation and add something intelligent.
    10 Mar 2014, 10:03 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    Monfrere-
    I just recd and read your message 10 March 10:03 a.m.

     

    You're desperate and your story is weakening daily.

     

    And btw, your time frames are simply your creation to accommodate your position. Nobody needs You to "explain the industry and how it works".

     

    Read UBS' upgrade today with a PT of $90 (or Stifel's of 5 March PT $82 ), etc. and you will find other intelligent arguments against your growing unpopular position.

     

    I agree with your right to your position, I simply don't agree with it as doesn't 18 Major Analysts from January to date.
    10 Mar 2014, 10:18 AM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    If you believe analysts when they say, "It's been going up so it will probably keep going up, buy buy buy," then my opinion is meaningless. Please just skip my posts in the future. Hopefully someone else will have an opinion. The UBS upgrade does so on the basis of momentum and on the comparison to other social media companies. I totally agree that Facebook is the least overvalued of the social media companies but that doesnt mean it isn't insanely overvalued. Good luck Bahamas, too bad you didnt decide to join the conversation.
    10 Mar 2014, 10:30 AM Reply Like
  • Trader8877
    , contributor
    Comments (187) | Send Message
     
    I see FB being sued on the WhatsApp deal but no reports in our financial media. Its headline news on BBC. Is this how crooks control the market by controlling the news?
    9 Mar 2014, 04:11 AM Reply Like
  • 22643611
    , contributor
    Comments (2086) | Send Message
     
    I would like to point out once again that advertising is a 100% tax deductible
    business expense.
    I find it a bit laughable that people have been saying (for years) that internet
    (FB, YHOO, GOOGLE, etc..) advertising does not work yet............the advertising
    revenue continues to climb for internet companies.
    In my opinion it only has to show a small ROI for the companies to continue to
    up the advertising ante due to the tax deductible aspect and more importantly
    COMPETITION. Do you think COKE is going to say, well even though our ads cost us nothing we are going to stop internet ads and let PEPSI continue.

     

    Yeah riiiiiiight. Think people!
    9 Mar 2014, 10:53 AM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    As I said in the other thread, tax deductible means that you can write it off on your taxes, not that it is free. If your company is profitable you'll save about $0.25 on the dollar in taxes assuming an average effective tax rate of 25% or $0.40 on the dollar if you use a full 40% tax rate.
    10 Mar 2014, 10:06 AM Reply Like
  • thecooler
    , contributor
    Comments (21) | Send Message
     
    Mofo - so ur thesis is omnicom and the like don't work at the discretion of their enterprise customers? Nor are they accountable for flippantly using ad platforms they've never used. Makes sense then, why they're the top agency in this business allocating half a trillion dollars on behalf of the world's largest companies! Like I said pal, hate the game, not the player. Also, please, with all due respect, stop making ur own investment decisions while u r still able good buddy!
    9 Mar 2014, 11:08 AM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    So first, on performance, I've returned over 100% per year, every year since 2007, including 2013 which had a big loss on Facebook, my worst loss by far on one of the biggest positions I've ever had. I think my money is fairly safe with my investing.

     

    Second, yes, someone who has over 500B in advertising dollars is more than welcome to test a new product with 100M. To clear up those numbers for you that's $500,000M vs 100M. $1 per $5000. 0.02% allocation. Advertising has become much more about the numbers, but you have to test before you have any numbers. You run some ads and see how they do. Then you invest more or kill the campaign based on that performance.

     

    The reason it says that Omni signed it and not that 5 specific companies signed means that Omni got some insane discount for promising that they would spend at least 100M. That means you can expect them to get AT LEAST 200M worth of inventory in exchange for that guarantee.

     

    You have a very strong opinion in your post, which coupled with your obvious lack of actual industry knowledge, is the reason you are so (over)confident in your position.
    10 Mar 2014, 09:53 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    You must really have liked this morning's, 10 March,2014, UBS upgrade of FB to BUY and PRICE TARGET from $72 to $90.
    10 Mar 2014, 10:00 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    monf-
    Oh, I joined the conversation, you just didn't like what I had to say.

     

    Don't worry you won't hear from me again , unless you personally attack.

     

    An observation-

     

    Anyone that claims :

     

    "I've returned over 100% per year every year since 2007 including 2013 which had a big loss on Facebook", imo is delusional at best and any iota of credibility was tsunamied away with such a ridiculous comment.

     

    The only real follow-up truth to that statement is that your FB loss ,based on your comments, will grow.
    We are not stupid people on SA nor are the 19 analysts since January 2014 continuing to raise FB metrics.

     

    Be real, if your success is as great as you have stated (lol) what the hell are you doing wasting time with threads on these sites?
    Your proclaimed "investing record" over 7 years far surpasses anyone, EVER.

     

    I suggest you get a grip.
    10 Mar 2014, 11:35 AM Reply Like
  • monfrere
    , contributor
    Comments (613) | Send Message
     
    Believe what you will, to be honest, I wouldnt believe me either if I were you, but it does not detract from it being the truth in this particular case. I started with only 25k and have pulled money out every year. I invest almost exclusively in options and have had a great run. Most of the money was made on only about 10 trades. The big ones were LVS shares at 2.50 (sold at $60), JCP OTM puts ridden from $120 down to $10. RIMM OTM puts ridden from $120 to $12. Google calls bought at 400, ridden to 800. Apple puts bought at 700, ridden to about 500 or 450 (I kept chickening out and rebuying on that one), there are others, but this bragging is making my head too big.

     

    I take a LOT of risk and no sane person would ever entrust me with their money as I could easily lose huge chunks at a time, as I have gotten my butt handed to me with Facebook. Fortunately, it wasnt a big enough hit to undo the money I made on JCP and I returned over 150% in 2013. When you make 800% on a trade, even one going to 0 won't ruin that year.

     

    I joined SA because FB was my first big loss and I wanted to see if the other side of the position had anything smart to say. The analysts are worthless, and have ALWAYS pumped stocks right before they collapse. Pointing me at them does nothing for me. I've enjoyed my dialogue with 226 for the most part although it got ugly for a while. I hope that another bull with a real opinion joins these boards soon.
    10 Mar 2014, 11:50 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3114) | Send Message
     
    Pathetic post.

     

    Citi Upgrades FB this morning to BUY with PT moved from $70 to $85.
    11 Mar 2014, 12:11 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs