Facebook’s Instagram bet has paid off, but how long before child overtakes parent?

Instagram's growth story has been phenomenal, and it has the potential to take away the social media crown from Facebook itself

Instagram, which started its journey as a mere image sharing platform, is now even challenging its parent Facebook in the social media game.

A report that came out recently states that if Instagram were a standalone app, it would be valued over $100 billion. While this speaks volumes about Facebook CEO Mark Zuckerberg’s vision with regards to Instagram early on — it was bought by Facebook for $1 bn in 2012 — it should also ring some alarm bells at Menlo Park. This is because, Instagram is not just driving away users from rival social media platforms such as Snapchat, Twitter, YouTube, but according to a Pew Research Study, Instagram and YouTube are the most popular apps followed by Snapchat, among teens in the US teens. Also, users are spending on an average the same amount of time on Instagram, as they do on Facebook. A large portion of this population is the same that was once hooked on to Facebook.

When Facebook was on this spree of copying most of Snapchat’s features, it replicated the ‘Stories’ feature across all its four major products: WhatsApp, Facebook, Messenger and Instagram. But the app which gave the most returns was Instagram, which even surpassed the engagement numbers as compared to Snapchat.

IGTV launch at an event in San Francisco. Image: Instagram Press

IGTV launch at an event in San Francisco. Image: Instagram Press

User acquisition rates on Instagram are unparalleled, not just within the Facebook ecosystem, but across the social media industry. Instagram launched Instagram Stories a little less than 2 years ago. Back then, the Instagram user base was around 500 million users. In two years since, Instagram has managed to garner another 500 million users. None of its contemporaries have managed to acquire half a billion users within two years.

It’s no wonder then that Facebook is going aggressive Instagram, and is now pitching it against Google’s YouTube as well, with the launch of the IGTV app. With online video viewing habits undergoing a sea change, there hasn’t really been a proper rival to YouTube which has been around since 2006. Facebook’s multiple attempts at doing video, such as Facebook Live and the more recent Watch, hasn’t really been able to cause any dent in YouTube’s viewership numbers or the user-loyalty on that platform.

Instagram Stories came out of nowhere and left its originator (Snapchat Stories) languishing as far as user growth is concerned, an area where Instagram has shown sustained improvement. Among the current crop of social media apps doing video, Instagram is the only one which can challenge YouTube’s monopoly.

YouTube is the one-stop shop for video, for most of the internet audience. Image: Reuters

YouTube is the one-stop shop for video, for most of the internet audience. Image: Reuters

Also, thanks to the YouTube monopoly, content creators are at the mercy of YouTube when it comes to making money from their videos. Recently, YouTube’s Partners Program members weren’t happy with the demonetisation methods on certain ad-friendly videos on its platforms. Moreover, if you are small video channel without the hundreds of thousands of subscribers, good luck trying to earn your living by just YouTube ad earning.

On the other hand, something like an IGTV which builds up on Instagram’s popularity seems to be a more inviting place to start (even though there are no monetisation plans on the platform yet). We are already seeing internet celebs also diversifying with vertical videos on IGTV. That will be on the rise. And with that will come monetisation plans. I am not for a moment saying that it will be easy to build your audience on IGTV as opposed to YouTube. You still have to create excellent content to get noticed. 

Numbers vs Engagement

Statistic: Number of monthly active Facebook users worldwide as of 1st quarter 2018 (in millions) | Statista
Find more statistics at Statista

Facebook has the numbers. At 2 billion plus, its user base has always been on the rise, although not as dramatically as Instagram. But just having numbers isn’t the real deal these days, it’s how long users are engaged that’s an important metric. In the US, on an average, users spent 53 mins per day on the Instagram Android app whereas that number was 58 mins per day on the Facebook app. Sure, with the desktop version, Facebook still outclasses Instagram, but on mobile at least, Instagram is killing it.

It’s great news for advertisers as well. It’s no wonder that you are seeing more ads per scroll now on Instagram than say a couple of years ago. That’s something which will continue to increase. Ads have found their way into Stories as well. So far, ads can be easily swiped off from Stories, but who’s to say that Instagram won’t have pre-roll ads on Instagram Stories? IGTV is another platform which is ripe for exploitation by advertising. The combined strength of Facebook and Instagram is a compelling proposition for any media planner. The sticky nature of both these platforms, further cements its position as the go to social media ad platform. 

No longer just an image sharing platform

Screenshots of Instagram Lite. Image: TechCrunch

Screenshots of Instagram Lite. Image: TechCrunch

If one looks at the number of features Instagram has been testing and has introduced in the last six months, it seems as if it is on its way to becoming a Super App. Here’s a rundown of some of the features starting from the latest

Instagram Litefour-way video calling, redesign of the Explore tab, IGTV app, shopping feature inside Stories, @mention sharing feature in Stories, a button for muting posts without unfollowing anyone, testing of ‘You are all caught up’ feature, creating a Story with posts, Emoji slider, action buttons for booking tickets and making appointments, testing native payments, testing music stickers, testing Facebook-like emoji features, adding multiple images and videos to Stories, Instagram takeout, new Focus mode for bokehlicious portraits, Nametags feature, New Posts button, testing a post quote feature, testing features such as starred chats and search filters, privacy features on Direct messaging, letting other users reshare your public posts, new Type feature, schedule posts feature for business profiles, GIPHY sticker support, Direct messaging with ‘last active’ feature.

Just in case, you are wondering, this is not a collection of Instagram features from its inception, but just the ones that have been announced or are being since the start of 2018!

As is clearly evident, the key responsibility areas for Instagram have clearly changed. Now with IGTV operating as a separate app, with some presence on the native Instagram app as well, we are sure to see aggressive updates coming there too, to make it more appealing to content creators.

Instagram has won the mobile landscape        

Instagram has been a mobile-only platform from day one. Yes, there is a web interface as well, but unlike Facebook where a desktop platform just lets it spread its wings, desktop for Instagram is quite limiting in terms of functionality. The growing trend of mobile phone users over those accessing the internet from a desktop will always be on the rise, which again works in Instagram’s favour over Facebook.

Facebook wouldn’t mind the attention that Instagram is getting, as trends-wise Instagram is clearly the winner among the youth demographic. Plus it lets Facebook collect some good karma points, especially after the data breach disaster that it is still dealing with. I wouldn’t be surprised if Facebook introduced more new features on Instagram and IGTV before bringing them to the mothership. Practically and even business-wise, it makes a lot of sense.

It does not matter in how many awkward ways Zuckerberg tries to deny it, but the fact remains that the Facebook ecosystem has no equal (unless you are in China that is, which has its own homegrown platforms). That Facebook is a monopoly, is a foregone conclusion. Facebook also knows for a fact that its user base and engagement numbers aren’t going to go drastically south any time soon. Irrespective of the bad press.

In such a scenario, Facebook putting all its energies behind Instagram, which is seeing massive growth, seems to be a logical thing to do. Younger audience does not relate to Facebook anymore as compared to Instagram or Snapchat. And this has been a proven trend over the last couple of years. Even Indian teens for that matter prefer Instagram over Facebook. So reaching the audience where the eyeballs are, makes business sense for the advertises as well.

Statistic: Number of monthly active Instagram users from January 2013 to June 2018 (in millions) | Statista
Find more statistics at Statista

Think about it, when was the last time you actually clicked on an ad in Facebook and checked the site out? Now think about the Instagram experience, where even ads show up looking like posts, although with clear demarcations. Because the experience is so seamless, there is a high possibility that you may have clicked on that movie theatre ad to eventually buy tickets or been impressed with the discounts offered by your favourite e-commerce retailer and actually proceeded to engage with the advertiser. Instagram is already testing e-commerce and native payments feature in-app, so you don't have to leave the app if you want to shop. 

How long before Instagram overtakes Facebook?

You may have noticed a pattern in this story where I have been talking about Facebook and Instagram as though they are rivals. You can see it both ways. Even though Facebook owns Instagram, the hard reality is that it is showing immense growth potential that can not only challenge the other social media platforms but the parent Facebook itself. The announcement of Instagram Lite, is sure to get many more users from developed countries, who are just about getting on to the smartphone bandwagon, on to Instagram. 

Unless Facebook forces the draconian algorithm changes where discovering Instagram users becomes a challenge (and only paying up front will increase visibility), metaphorically speaking, it’s not unreal to imagine the child taking over the parent some day.

In terms of engagement numbers, Instagram is almost toe to toe with Facebook. Doubling the user base is surely an uphill task for Instagram, and then there’s always the fear of plateauing after showing the rapid growth, Snapchat being a case in point.

Instagram has got a lot of things right in the last couple of years, and with IGTV as a separate app, there is a whole new avenue for it to capitalise on. 

I don't see any reason why Instagram will not take over Facebook, both in terms of user base and engagement numbers, in the next couple of years.

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