The campaign is based on the premise that Father Christmas has lost his elves and the last place they were seen was in an "Elfie" he took.
Ted Baker is asking people to help find the elves over the next three weeks in order to win prizes.
A special Instagram account, called @TedsElfie, has been created, which uses Instagram formatting to create a storyboard from a specially commissioned illustration.
Within the images people can navigate their way round a storyline using tags that give them options to follow.
Ted Baker is also using social competition mechanics such as asking people to tag their friends in comments to grow the reach of the campaign.
Craig Smith, brand communication director at Ted Baker, said, "Digital is a key element of our global marketing strategy at Ted Baker, which meant it was important to create a campaign that would have real standout.
"Using Instagram in this exciting and engaging way allows us to interact with both our existing and new audiences in Ted’s innovative manner."
Client: Craig Smith, brand communication director, Ted Baker