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• REED ALBERGOTTI
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Facebook Inc. said that it would begin putting advertisements on Instagram, the photo and video-sharing service it purchased for roughly $1 billion in 2012.

The announcement, which came an hour before competitor Twitter Inc. unveiled details of its plans for an initial public offering, marks the first attempt by Instagram to turn its popularity into revenue. Just over a year after its purchase by Facebook, Instagram still hasn't generated a cent for its parent company.

A Facebook spokesman said the company was treading delicately to make the ads as unobtrusive as possible in order to retain Instagram's user experience.

"Seeing photos and videos from brands you don't follow will be new, so we'll start slow," the spokesman said. "We'll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands," he said.

The spokesman said the ads would appear "in the next couple of months," and only in the U.S.

The move also highlights how quickly Instagram has grown as a company. At the beginning of the year, it only employed 32 people, who were working almost solely on the product itself. It had only one employee focused on marketing, even as thousands of brands were using it for promotions. It has since ramped up hiring, including bringing aboard executives to work on ads.

Instagram's focus on the product and its hesitance to dip its toe into the advertising market mirror Facebook's early philosophy. Facebook CEO Mark Zuckerberg initially resisted advertising on Facebook, rejecting even lucrative offers for banner ads and marketing gimmicks for fear of alienating users.

Instagram has been equally careful to keep its growing user base happy, walking a tightrope between profitability and popularity. In December 2012, Instagram faced a backlash when it changed its terms of service to allow advertisers to use data and content from its users for ads. After the outcry, Facebook rolled back the policy.

A Facebook spokesman said the company would give Instagram users the ability to hide any ads they don't like, and provide feedback about "what didn't feel right." He added: "We're relying on your input to help us continually improve the Instagram experience."

Instagram's advertising rollout was spearheaded by its director of business operations, Emily White, a Google Inc. executive who was wooed to Instagram by Sheryl Sandberg, Facebook's chief operating officer.

Despite Instagram's large audience of 150 million active users per month, the company faces some hurdles. Companies like Nike Inc. and Lululemon Athletica Inc. have already found ways to run viral marketing campaigns on Instagram without paying anything.

A Facebook spokesman declined to comment on potential challenges facing Instagram's advertising business.

Mobile advertising is seeing fast growth, according to research firm eMarketer Inc., which estimates an 89% increase in 2013, to $8.8 billion world-wide. Facebook accounts for 15.8% of the mobile ad market, up from 5.4% last year. Google makes up 53.2% of the market.

The spokesman said that the ads will look "natural," but declined to show what the ads will look like. The company will provide more details in the near future.

Write to Reed Albergotti at reed.albergotti@wsj.com