Lessons Learned From Instagram’s Ad Policy Fiasco

Instagram's back-and-forth on its advertising policy is a case study in tech PR blundering. It demonstrates the need for clear explanations of terms of services changes. It also raises the question of whether apps should update their terms to cover future monetization strategies as early as they know what these money-makers look like, or if they should notify users right before the ads go live.

When Instagram changed its ad terms this week, co-founder Kevin Systrom admitted its mistake was that it confused everyone. And as I've written, you always fear what you don't understand.

Two years in, it was time for Instagram to step up plans for monetization. But it used vague and omnious legalese to update its terms and say it could be paid to use people's likeness, photos, and actions for promotions. Users jumped to the the worst possible interpretation, panicked, and forced the company to apologize and revert the advertising terms to the old version.

That was a massive exercise in burning Instagram's social capital. It had had a pretty good run without security or privacy problems. Even through the Facebook acquisition, people remained hopeful the company would keep its hands clean. In just a few days, millions of people lost trust in Instagram. Some completely, exporting their photos and deleting their accounts, most just stopped seeing it as different than the stereotypical money-hungry corporation.

Needless to say, Instagram could have handled this whole situation better, and others startups would do well to avoid this mess. If there's one big takeaway from the who debacle, it's that web services have to make sure not to confuse their users with terms of service updates, or people will assume the worst. But a smooth terms of service change takes careful timing too.

When Should An App Spring Its Ads TOS On Ssers?

Maybe the answer is right from the beginning. Startups, just like Instagram, often launch with terms that say users may see ads. Nowadays they should probably include that users may be ads. But if done too vaguely, this could deter growth, or cause PR problems too early when a service doesn't have users locked in yet.

You could say that was the case here. Instagram has great market and mindshare right now, but it's also just been joined in the photo sharing space by several competitors. Twitter now has filters, Flickr launched its own app, and now Google has Snapseed. Plus people were already a little riled up about Facebook integrating data with Instagram and the governance vote being eliminated.

It wasn't the best time for Instagram to give users a scare.

More importantly, though, it wasn't ready. Instagram's vague language was surely in part because it doesn't exactly know what it wants to do with ads. The more specific the plans, the more clear a company can make its terms, the less users have to misinterpret, and the less outcry there will probably be. Some will say as soon as possible, but if you do it too soon there's no way you can do so clearly.

But there's a flip side. A company doesn't want to wait until just before the ads themselves start showing up, because they don't want to give users tangible evidence to latch their anger onto. That's probably what Instagram was shooting for. It hoped to slide these new ad terms in, and later subtly start showing ads without much of a stir.

Now with the old ad terms in place, Instagram is going to go meditate on how its advertising business will work. We'll see if that eventual TOS change can hit the sweet spot between when people forget about this week's fiasco, and when we finally see how tomorrow's camera makes money.

[Image via Getty]