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Instagram’s IGTV to soon show ads, will compete YouTube

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Instagram is all set to sell advertisements in IGTV, its home for longer videos, as they look to compete with YouTube for a larger share of the online video market which is growing all the time.

Instagram has already connected with top video creators on Friday and has asked them to partner on ad tests. Those in the program will receive a 55% share of all advertising in IGTV which is the same rate as YouTube, as per people familiar with the matter. The company will start testing the ads this spring.

“This is another step forward to help creators monetize with IGTV,” Justin Osofsky, chief operating officer of Instagram, said in a statement. “To be sure we get this right, we are talking to a few emerging creators to help us test this and plan to expand slowly.”

One of the biggest reasons behind this move is a lack of revenue sharing. Within the main app, ads that look like regular posts churn out about $20 billion annually in revenue, and this accounts for more than a quarter of sales at owner Facebook Inc., people familiar with the matter have informed.

Facebook is relying on Instagram as they look to its next phase of growth. This comes even as the social network is facing a slowdown. Currently, Instagram has ads in its main feed of updates, as well as in its stories feature — the one which has posts that disappear after 24 hours.

YouTube, which is the world’s largest online video site, generated $15 billion in advertising sales last year. The online video advertising market keeps on growing and it also includes Roku Inc., Walt Disney Co.’s Hulu and Amazon.com Inc.

IGTV has not managed to find its own niche and it has also struggled to find users since it was first rolled out in June 2018.

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