As a part of the agreement, users of the photo-and-video-sharing site will see ads from brands represented by Omnicom.
Instagram confirmed the deal but declined to comment on its terms, the report said.
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"This doesn't change our advertising strategy moving forward," Instagram said in a statement. "Our teams are going to work hand in hand to develop and execute campaigns that provide people with amazing imagery."
The deal comes as rumors surface that brands are disappointed with Instagram's parent company, Facebook, since it changed its news feed algorithm in a way that complicates ad targeting.
According to the report, Instagram is also mulling a deal with a unit of ad agency holding company Publicis Groupe, which is slated to merge with Omnicom.