Instagram's tweak may be the beginning of a multibillion-dollar industry

Last month, Instagram switched on its API for ads. Its mobile ad revenues are expected to rocket from $595 million a year to $2.8 billion by 2017, reports Tech in Asia

Last month, Instagram – the image-based social network with more than 300 million users – made a change that barely received notice outside the tech world. It officially switched on its API, or application programming interface, for ads.

The reaction, or lack thereof, was predictable. APIs aren’t generally the stuff of front-page news. On a technical level, the change means that ads can now be posted on Instagram by just about anyone using online tools that plug directly into the network. On a practical level, it means that the Internet’s newest advertising behemoth is officially open for business.

Thanks in part to the new API, Instagram’s current mobile ad revenues of $595 million a year are expected to rocket to $2.8 billion by 2017 – leaving even giants like Twitter and Google in the rearview mirror in the US market.
 

For marketers, Instagram has long been a coveted target. The network is believed to have passed Twitter and LinkedIn in terms of active users and to now be second in size only to Facebook (its parent company) among US-based social platforms. Moreover, while growth at Twitter and Facebook is largely plateauing, Instagram expanded at an incredible 50-percent clip in 2014. And its users are considerably younger than those on other major networks: a full 44% of people on Instagram are 18-29, versus just 23% on Facebook and 33 percent on Twitter.
 

Reaching those users through advertising, however, hasn’t been easy. Instagram has been famously cautious in rolling out ads. The network began testing the waters with photo-based ads in late 2013, adding video ads last year. These streams alongside ordinary photos, were distinguishable only by a small “sponsored” disclaimer. Reception was largely positive and initial results encouraging.

This is an excerpt from Tech in Asia. You can read the full article here.