Facebook to sell advertising on its Instagram photo service, the first effort to make money from the acquisition

Facebook’s Instagram to Add Advertising: SF Mover

Facebook Inc. (FB), operator of the world’s most popular social network, rose in trading today after it said it would sell advertising on its Instagram photo service, the first effort to make money from the acquisition. Shares rose 3.8 percent to close at $51.04 in New York, near their all-time high. Instagram promotions will start to appear on the mobile application, which lets users share images from smartphones, in the next couple of months in the U.S., Facebook said in a blog post yesterday.Facebook is seeking new ways to drive revenue from mobile devices as users increasingly access digital services from wireless devices. Mobile made up 41 percent of ad revenue in the second quarter, up from 30 percent in the previous period.

“There just continues to be momentum, continues to be good news,” said Benjamin Schachter, an analyst at Macquarie Securities USA Inc. “Even though the Instagram news was somewhat expected over time — we’ve been waiting for the announcement this year, and yeah, it’s going to be a positive.”

Instagram will deliver a “small number” of pictures and videos from a handful of companies that users aren’t necessarily following, the company said.

“Our aim is to make any advertisements you see feel as natural to Instagram as the photos and videos many of you already enjoy from your favorite brands,” Instagram said on the blog. “After all, our team doesn’t just build Instagram, we use it each and every day. We want these ads to be enjoyable and creative in much the same way you see engaging, high-quality ads when you flip through your favorite magazine.”

Users will be able to hide promotions they don’t like, the app developer said. They can also give feedback about what doesn’t “feel right” about the ads. Instagram, which Facebook bought for more than $700 million last year, has more than 150 million users, up from more than 130 million in June.

Facebook, based in Menlo Park, California, has continued to update the service. Instagram unveiled tools in July that lets members embed photos and videos on outside websites, including blogs and news providers. Videos were added to the photo-sharing app in June.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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