Instagram gives a preview of upcoming ads

New ads will clearly be labeled as sponsored, and will give users the option to hide them

We all know that advertising is coming to Instagram, because, well, the company told us that earlier this month.

The ads, Instagram said, will be both photos and videos, will appear in users feeds, and will be from brands that the user does not follow.

The only thing that we did not know was what exactly these ads would look like, but Instagram has now fixed that by being kind enough to offer up a preview. Users in the United States will see the following sample ad "sometime in the coming week":

"This is a one-time ad from the Instagram team that’s meant to give you a sense for the look and feel of the ads you will see," Instagram noted.

As you can see from the sample, it looks like any other Instagram picture that you might see, except for big blue "sponsored" label in place of the time stamp. Clicking on the link will bring users to a page explaining how advertising works on Instagram.

The "..." on the bottom right-hand side of the ad will allow users to hide any ad that they don't like, as well as give feedback to Instagram as to why they wanted to hide it. 

Once again, Instagram insists to its users that advertising will not change their experience at all. In fact, it will enhance the site for everyone. 

"Our focus with every product we build is to make Instagram a place where people come to connect and be inspired," the company wrote.

"Building Instagram as a business will help us better serve the global—and ever growing—Instagram community, while maintaining the simplicity you know and love."

Advertising is key

Advertising is key to social media companies that want to become real moneymakers. That is especially true for Facebook, which makes the vast majority of its money from that sector.

In its latest quarterly earnings report, Facebook's advertising revenue was $1.60 billion, or 88% of total revenue. It increased 61% from the same quarter last year. Mobile accounted for 41% of that revenue.

And that number will no doubt go even higher by the end of this year. 

Facebook's ad revenue for 2013 is set to see its mobile ad revenue shoot up over 333%, from $470 million to 2.04 billion, according to a report from eMarketer released in June.

Want to be even more impressed by how well Facebook is going to do in 2013? In 2011, the company's mobile ad revenue was zero. The company went from making zero dollars to over $3 billion in two years.

So putting ads on Instagram, with its 150 million monthly users, is key to Facebook's growth. And it is already causing at least one analyst to raise his price targets for Facebook

How much will these ads be able to net? Quite a lot, potentially. Sterne Agee Analyst Arvind Bhatia believes that number to be close to a billion dollars in just a few years.

"Net, we estimate that Instagram could generate $800 million in revenue in the next three to four years. We note that Twitter, with roughly 50 million MAUs in the U.S., is on a run-rate to generate $350 million to $400 million in the U.S. this year."

These numbers are a step up from last year, when Bhatia predicted that it would makes between $500 and $700 million in the same amount of time. 

(Image source: https://blog.instagram.com)