December 5, 2012 / 8:45 PM / 7 years ago

Instagram's Systrom coy on ad plans, user data

PARIS, Dec 5 (Reuters) - Instagram’s youthful Chief Executive Kevin Systrom allowed himself a luxury at a Paris technology conference that he never feels comfortable doing in San Francisco: wearing a tie.

The founder of the popular photo-sharing app, now owned by Facebook, looks less comfortable when asked whether he’ll soon be adding advertising to his service.

“We don’t have any specific plans to share about advertising yet, mostly because we’re focused on growing the company as quickly as possible,” Systrom said in an interview with Reuters TV at LeWeb technology conference in Paris.

The decision, he conceded, may no longer be his alone.

Instagram, which has 100 million users sharing pictures taken on their mobile phones, was acquired by Facebook in April for $1 billion in cash and stock.

With Facebook struggling to prove to investors that it can fulfil its much-hyped growth potential and advertising on mobile devices proving particularly tricky, pressure is likely to grow on Systrom to monetize his creation in the near-term.

So far, Instagram is still run largely independently from its parent company, Systrom says, but he admits the grown-up world of focussing on the bottom-line may not be far off.

“Even from the beginning when we started Instagram, we realized we had to build an independent business, and even within Facebook, we realize we still have to contribute to the business,” he says.

Some of the value Instagram brings is helping Facebook, which has seen its share price drop about 28 percent since listing in May, think about how its 1 billion users surf the site while on the go from smartphones and tablets.

Justin Osofsky, Facebook’s platform partnerships director said in an interview, that Facebook was increasingly focused on mobile users.

“If you’re looking at kind of how we’re evolving our product, Facebook has become a mobile-first company.”

Facebook recently announced a plan to combine user data with Instagram, and eventually bowed to public pressure to hold a vote on the proposed change.

Data analysis is widely used by web companies from Google to Facebook to better target ads to users, but the practice is contested by some on-line privacy advocates.

Details are scarce on what Facebook actually wants to do with Instagram data, and Systrom didn’t provide much insight.

“I don’t have specifics about the data policy but what I can say is that we are looking to make the user experience better,” said Systrom, adding that Facebook’s data could be used to fight spam for Instagram users.

Facebook is already facing a class-action lawsuit in California that alleges that its Sponsored Stories feature violated California law by publicizing users’ “likes” of certain advertisers without paying them or giving them a way to opt out. The case involved over 100 million potential class members.

An Austrian student group also recently said it plans to take Facebook to court to try to get it to do more to protect user privacy.

Systrom sought to soothe such privacy concerns saying Instagram wasn’t setting up a scheme to sell data on its users.

“I think what people have to remember is that we always have the best intentions in mind for everyone and data sharing is not something that we focus on in the morning,” he said.

“When we wake up and we get to work, we’re not like, how do we get data to go from one place to the other, we’re simply trying to make the services better.”

Facebook, and its founder Mark Zuckerberg, however is further along than Instagram in terms of seeking to turn its user base into revenue largely via ad sales.

David Kirkpatrick, author of the book “The Facebook Effect” that charts the social network’s rise, said Zuckerberg had long known that he would have to turn his baby into a real business.

“Facebook has evolved to the point where they are willing to accept a degree of intrusion in advertising, although right now their mobile advertising remains too intrusive,” said Kirkpatrick.

“But their goal is that the ads be perceived as so useful to the moment, the situation and the person” that they are welcomed by the recipient, he said.

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