The Phenomenal Growth of Instagram and Its Implications for Facebook

Instagram growth and its implications for Facebook

 

When Facebook got ready to pay a billion dollars in cash and stock for Instagram in 2012, nearly two times the value its own investors assigned before Facebook bought the company, a lot of people believed that price was too much for a company with just 30 million users and 13 employees. But that move has paid off many times over for Facebook as Instagram’s user base started going on a tearaway growth phase since then.

Between 2012 and 2016, Instagram’s user base has grown nearly 20-fold from 30 million to 600 million, adding 100 million users in just the last six months. That’s staggering growth by any standards, and if they continue that pace of growth Instagram is looking at a billion users within the next two to three years – in line with the benchmark that Facebook originally set and sibling social app WhatsApp subsequently achieved.

Instagram growth implications for Facebook

The growth rate looks monstrous if you compare it to the growth of other social media platforms, and impressive even if you include its own parent, Facebook. Twitter, for example, added 3 million monthly active users in Q2 and another 4 million during Q3, a total of 7 million monthly active users in the last six months. Facebook added 134 million users during the last six months, which means Instagram is tracking closer to Facebook’s continued phenomenal growth.

Instagram growth implications for Facebook

Source: Techcrunch

Facebook took around three years to move its user base from under 50 million to above 600 million, and Instagram is closely following that growth path. Facebook had plenty of advantages at the time because there wasn’t enough competition to give them a run for their money. All of that happened nearly ten years ago when things were totally different.

Instagram growth implications for Facebook

Instagram, on the other hand, has competition, and that too a quality competitor in Snapchat. Despite that, the company has been able to keep moving its user base at this pace, which means their product has attained enough brand value to attract the crowd regardless of the competitive landscape.

The growth of Instagram has several long-term implications for Facebook. As both Facebook’s main platform and Instagram are standalone applications, the user base, despite the double counting, can be monetized nearly twice. From an advertiser’s perspective it provides extended reach, differentiated targeting and, at the end of day, the benefit of dealing with a single vendor instead of several.

As such, Instagram is the perfect offset to any potential slowdown in Facebook’s ad revenues that the company warned investors about in its recent quarterly earnings call. WhatsApp may yet emerge as the dark horse to provide yet another revenue stream, but for now Instagram’s contribution is solid enough to offset any gradual decline in Facebook’s own growth story.

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