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SunTrust Sees Facebook Gain From App Install Ads On Instagram Unit

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Facebook (NASDAQ: FB) got plenty of buzz for itself last week when an ad appeared briefly on its Instagram service for a so-far non-existent Facebook app called Bolt that would offer competition to the mighty Snapchat.

Snapchat rejected a $3 billion offer from Facebook last year, and it's widely assumed Facebook seeks a competitive product offering. But SunTrust's Robert Peck focused instead on the advertisement itself.

"The ad unit is the most intriguing aspect of the report," Peck said.

It was a so-called app install ad -- a click-and-buy format that so far hasn't run on Instagram. Adding them will contribute $500 million in annual revenue to Facebook, Peck calculated.

Whether or not Bolt is a real app, or merely a test of app install advertising on Instagram, Peck thinks it's inevitable that Facebook will roll out the format on Instagram. Twitter launched the format on its service last month.

Facebook acquired Instagram in 2012 for $1 billion, and so far, the mobile photo-sharing service has carried only limited brand-type advertising.

Mobile app install advertising is potentially more lucrative. The ads enable users to buy apps directly from the likes of Apple and Google.

Facebook itself has been running app install ads since 2012 and Peck said they've "contributed greatly" to its $5.1 billion of mobile advertising revenue in the past year.

Facebook was nearly unchanged Monday afternoon at $75.07 per share.

Posted-In: Instagram Robert Peck SnapChat SunTrustAnalyst Color Tech


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