Instagram is a Smart Phone app that was designed to let you take pictures and make them look like old-fashioned Polaroid or "Instamatic camera" photos. Take a look at their old logo, and you can see that. Like millions of other apps that are invented and introduced, the creators really had no idea if it would catch on. It did.
|Instagram's old logo|
It used to be that you could recognize an Instagram photo because it had the tell-tale "back in the day" photo filter applied, like an old color photo that had faded. And it's still being used for that by most people. But it has also become an important Marketing tool. There are ads there now, lots of them.
No, you can't put ads on Instagram, not like the ones you see around this blog (on Blogger), and you can't do ads next to the posts like you see in Facebook. In fact, Instagram doesn't even allow hyperlinks, except on the bio page, so you can't post a photo of something with a link to ...find out more... like you can on Pinterest. You have to be much more subtle.
If you want a lot of people to see your product on Instagram, you have to get it in front of a lot of people. And starting an Instagram account, and posting photos of your product to the dozen or so people who are following you, just isn't enough. You need to find an established Instagram account with a lot of followers, and one that lines up with the demographics that you want to sell your product to.
Now it starts costing you money. But it's not money that you pay to Instagram, or to some sort of AdWords program, like Google has. It's money that you give to the person who has the Instagram account. And it's all negotiable.
An example might be if you sell a wrist wrap used by people who work out, or have injured their wrists. You take a photo of a model wearing your product (be sure to use the square Instagram format!), a short slogan, and the address of your website. Then you see if an Instagram account with a lot of followers will post it there. They probably will, if you give them money. And sometimes, for even less money, you can get a "Shout Out" where your product is just mentioned on their account. Shout-Outs are even sold by companies on the web to streamline the process.
Right now, Instagram is a very good place to be for product placement (which is what advertising on Instagram is called). Of course, people don't like advertising, and as more and more of it piles up, less and less people will be following Instagram. Right now it's a good place to advertise.