Facebook Shares Soaring High On Instagram Advertising Plans, But Will Users Accept It? JMP Securities Thinks So

Facebook Inc FB announced on Tuesday that it’s going to open Instagram’s ad feed to all advertisers by the end of the year, following which the company’s shares opened strong on Wednesday and closed the day with 2.48 percent gains.
Ronald Josey, JMP Securities, was on CNBC recently to weigh in on this move by Facebook.

There Is No Another One To Instagram

“It’s one of the thing that we always think about, the balance between users and monetization,” Josey said. “And frankly if we have learned anything from Facebook in the past several years it’s that they are very careful in terms of not overloading their users’ feed with ads. And so, I am assuming they would do the exact same thing here in Instagram."

“They have certainly taken their time on testing what is the right approach to Instagram thus far and I would expect that from an analyst perspective, we’d like to see monetization ramp here at Instagram. We will like to see it’s around the corner based on the announcement here yesterday and today.”

He continued, “And from a user perspective, one thing we have learned is that social networks are awfully sticky, once you have take time to build your network, to build your friends, it’s difficult to actually move on to another one. In the case of Instagram, there really is no another one.”

Extrapolate The Lesson Learnt From Facebook

Josey was asked if there is a chance that users will start using Instagram less because of ads. He replied, “If we look at Facebook as an example…when they went public there was question about their mobile advertising business and the year after that they sort of proved they knew how to do that and user and engagement is still growing on Facebook today. So, extrapolate that lesson learnt from Facebook to Instagram.”