Instagram steps up competition with Snapchat ahead of its IPO, by introducing advertising to its stories feature.

Facebook's Instagram said it now has 150 million daily users on the stories feature of its photo-sharing site that was inspired by a popular Snapchat product, which broadcasts short videos that disappear after they're viewed, or after 24 hours.

Instagram will start to slip in ads between stories from friends, turning the popular feature into a moneymaker for Facebook.

"We're pairing this new format with a powerful advertising capability, so they can target the people that matter to them," said James Quarles, vice president of Instagram business.

Instagram will start the ad test in a few weeks with 30 clients, including Nike, Airbnb and Capital One. Quarles pitched the feature to advertisers last week at the Consumer Electronics Show in Las Vegas.

Instagram is gearing up for an initial public offering, planned for as soon as March this year.