Instagram will open up its ad sales business in the United States as part of its $4 billion acquisition of Snapchat, the social media app’s biggest acquisition to date.
Instagram said it will sell ads on Snapchat’s app for a fixed price and for a variety of other services, including direct-to-consumer advertising.
The acquisition also includes Snap Inc., which has said it plans to expand its ad product across its entire business.
“Snapchat and Instagram are complementary companies that can complement each other in an increasingly globalized digital world,” said Kevin Donahue, Instagram’s CEO and founder, in a statement.
The two companies have had a close relationship since 2014, when Instagram started selling ads through Snapchat’s platform.
The deal also marks the latest move by Snapchat to expand into the U.S., after it began selling ads in Europe last year and launched a $1 billion advertising deal with Uber in China.
Instagram also has $8 billion in revenue from its advertising business, and its ad revenue has increased by about 40 percent since 2014.
“The Instagram team has worked tirelessly over the last few years to help us create an effective platform for our customers to share and promote content and brands,” said Snapchat CEO Evan Spiegel in a press release.
“We’re excited to continue this collaboration with Instagram to deliver compelling, innovative, and powerful services to our users in the U and around the world.”
The acquisition is a major coup for Instagram as it looks to bolster its ad business amid a surge in smartphone use that could drive ad revenue growth in the near term.
Instagram currently has about 1 billion monthly active users in more than 190 countries.
The app launched in 2011 and now has more than 2 billion monthly users.
Snapchat has seen its app revenue shrink by around 10 percent a year since the app launched, according to comScore Inc.