To begin with, the ads will only appear when people click to watch IGTV videos from previews in their feed, and the initial round of ads will be vertical videos up to 15 seconds long.
Instagram will share at least 55 per cent of the revenue from these ads with creators, which would motivate more influencers to create material for IGTV.
"Starting next week, we are introducing ads in IGTV, our long-form video destination. We want to support creators' investment in IGTV by sharing advertising revenue with them," Instagram said in a statement on Wednesday.
In addition to ads, Instagram would also roll out 'badges' next month that can be purchased by subscribers from their favorite creators.
Badges will appear next to a person's name throughout the live video.
"Fans who have purchased badges in Live will stand out in the comments and unlock additional features, including placement on a creator's list of badge holders and access to a special heart," said the company.
Badges will roll out to a few countries in the coming months, including the US, the UK, Brazil, Germany, France, Italy, Turkey, Spain and Mexico.