Instagram Surpasses Twitter In User Growth

  • Instagram has now hit the 400 million users mark and in the process surpassed Twitter as the second most popular social media network.
  • A huge user base will help Instagram compete better with YouTube as a top video ad platform.
  • Instagram is set to soon become one of Facebook's largest growth drivers.

Instagram has now officially surpassed Twitter (NYSE:TWTR) as the second largest social media network after Facebook (NASDAQ:FB) measured in number of users. When Facebook bought out the photo-sharing site in 2012, Instagram users were pegged at just 40 million. Three years down the line, Instagram has managed to rack up ten times as many users--more than 400 million at the last count up from 300 million just nine months ago. Instagram says in a blog post that the explosive growth has mainly been coming from Europe and Asia, and cements the notion that it remains by far the most popular photo-sharing website out there.

Instagram remains the #1 social site for teens, with 32% of teens using the site according to Piper Jaffray. In sharp contrast, only 14% of teens now use Facebook down from 33% just two years ago. Instagram therefore plays a very key role for FB, by helping the company to net a younger demographic that it would otherwise have a hard time reaching. This is important for marketers who would like to build brand affinity with younger users through Instagram videos.


There are a couple of reasons why Instagram is so popular. The platform is free and easy to use with no need for a complicated help page to get it up and running. Instagram’s photo-editing bell and whistles are completely free to use. And, Facebook’s decision to keep Instagram free of all that ad clutter that is common in other photo-sharing sites seems remarkably prescient. Instagram boasts a clean interface that loads quickly and allows users to focus more on viewing their friends’ photos instead of viewing unsolicited banner ads shoved in their faces.

But where does Instagram fit in Facebook’s scheme of things?

Huge revenue potential

Although Facebook does not use Instagram to display ads directly, it displays Instagram videos on Facebook as paid ads. This allows the company to make money indirectly from the site without diluting its unique user experience. This modus operandi is apparently very successful--eMarketer projects that Instagram will contribute 14% of Facebook’s mobile ad revenue in 2017, up from 5% currently by growing its revenue from $595 million currently to $2.81 billion. eMarketer’s estimate might prove to be a bit conservative since it’s based on the assumption that most of Instagram growth will come from the U.S. whereas Instagram says in its blog post that most of its new users have been coming from Europe and Asia. More than 75% of Instagram users live outside the U.S.

Facebook has lately been introducing Instagram advertising to numerous international markets--30 new countries including Italy, Mexico, India, and Spain will now access Instagram ads. Instagram advertising was previously only available in seven countries.

Competing with YouTube

YouTube is perhaps the world’s largest video platform, and garners billions of views every day. YouTube brought in revenue of $4 billion for Google (NASDAQ:GOOG) (NASDAQ:GOOGL) in 2014, but could only managed to break even after paying for content costs. YouTube’s ability to make money is hampered by its limited ad targeting--the platform only uses DoubleClick data for ad- targeting. DoubleClick accounts for just 30% of Google’s revenue, which essentially means that Google is left in the dark regarding the preferences of 70% of its audiences.

Google recently decided to start using data from its core site for ad targeting purposes on YouTube. This will make the platform more attractive for marketers and improve the CPM rates of YouTube ads. To compete on an even footing with YouTube, Instagram has to offer a comparable level of viewership as YouTube, and demonstrate to marketers that its videos can deliver an equal or better ROI. That’s the biggest reason why a huge and rapidly expanding user base is a good thing for Instagram.

Facebook recently moved to improve the value proposition of Instagram ads. The company announced that it will start using data from Like and Share buttons to improve ad targeting on Instagram, as I discussed in this article. Facebook wants to make Instagram ads more relevant to audiences and in the process help the ads command better CPM rates from marketers. Marketers are naturally willing to pay more for ads that deliver a better ROI.

Bottom Line

Instagram’s rapidly expanding user base is great news for Facebook.A large user base will help Instagram to become an attractive ad platform for marketers and help it to compete with popular platforms such as YouTube.

Show Full Article
5 2
Is this article helpful ?    

Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

show more

Comments on this article and FB stock

user profile picture
Tom Schon
Comments give the biggest engagement rate, trust my expirience of many years. You can follow and like with a single tap so they're evaluated much less than any somehow meaningful comment. has a large set of comments ready to be posted, but even if you're in a very peculiar niche - you can make your own answer samples (e.g. t promote a fatburner comments like "how skinny you've become!" "you look even better now!" etc. can work miracles). A handy system of new comments tracking is also very helpful as you won't lose them in the stream of likes and new followers as it happens in the original Instagram app.
Do share this awesome post