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Instagram ads are turning into 'likes' 5 percent of the time

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Kevin Systrom Instagram stock 2040
Kevin Systrom Instagram stock 2040

Like shirt sponsorships in football, advertising spliced into the web's most popular free services has grown to become an accepted, if unwelcome, reality. Instagram jumped on that bandwagon this month with its first sponsored post, which has drawn the inevitable chorus of disapproval but also a surprisingly high rate of user participation. Company CEO Kevin Systrom tells GigaOm's Roadmap conference that over 5 percent of all ad impressions turn into Likes — an impressively high number by online advertising standards. Systrom stresses that Instagram is taking it slow and working with a limited group of advertisers in order to "keep the standard really, really high."

So far, the effort appears to be paying off, but Systrom himself admits that scaling up the venture without losing that tailor-made feel may be tricky. Being Facebook's biggest acquisition by far, Instagram is now facing up to the dual responsibility of not only driving more users to Mark Zuckerberg's social empire but also generating revenue of its own. The early indication is that carefully chosen brands, who have already shown themselves to be popular on Instagram, can find success by paying for a greater audience. The question is whether Systrom and company can maintain the appeal while expanding the range of advertisers.