As I’m sure you’ve heard by now, Facebook acquired photo-sharing application Instagram for an astonishing $1 billion dollars in cash and stock this morning. The social Web was abuzz with excitement, but also much confusion. One billion dollars is a lot of money to spend on a company that generates no revenue.

But there’s a lot that Instagram offers Facebook. For starters, Facebook was said to be working on its own photo-sharing app. Instagram offers them an excellent platform with an active user base. Then, there’s the defensive benefits. Google was also said to be interested, and Twitter’s Jack Dorsey was an angel investor of the start-up.

But there’s one more advantage that Instagram offers Facebook, that could be far more lucrative than the rest. It’s not so far fetched to think Facebook could serve ads on Instagram at some point. This acquisition just delivered Zuckerberg an extra 30+ million potential ad viewers. That’s not a small figure for a company hoping to trump Google in the $2 billion mobile ad space.

I suppose only time will tell what Facebook’s true intentions are with Instagram (and I’m fairly certain Zuckerberg will take as much time as he needs). But all in all this looks like a very good deal for both sides. Congratulations to Mike Krieger and Kevin Systrom.