Instagram Trumps Snapchat in Daily Active Users, but Does It Matter?

By Markets Fool.com


Image source: Snapchat.

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If there had to be a single major theme in social media in 2016, it would probably be the emergence of Snapchat from upstart to the most revolutionary force to hit the media and online advertising worlds since Facebook .

With a sky-high valuation and plans to potentially hit $1 billion in revenue in 2016, Snapchat could even hold an IPO this year.

It's for these reasons and more that recent news that Facebook-owned Instagram is now larger than Snapchat isn't all that monumental.

Instagram remains larger than Snapchat

Last week, with its fifth birthday one week prior, Instagram announced that it had surpassed 500 million monthly active users (MAUs), one of the most widely monitored social-media usage statistics.

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Instagram's CEO Kevin Systrom commented in an interview with Time, "It's a big milestone for us, because we set [out] to create a community, not just a photo-sharing app." However, while Instagram reportedly has its sights set on joining Facebook as the only social network to ever reach 1 billion users, Instagram's impressive MAU numbers are apples and oranges compared with its rival Snapchat.

Image Source: Snapchat

But we do have a way of directly comparing the two high-growth social applications. Snapchat prefers to measure its user base in terms of its daily active users (DAUs), of which the company reportedly had over 150 million as of early June. That might sound like a lot. For example, Twitter sees only 110 million users engaging with its service on a daily basis. At the same time, though, Instagram still reportedly dwarfs Snapchat's daily active users, with over 300 million DAUs.

Viewed this way, Snapchat's relative valuation, well in excess of that of some of its social-media peers, seems sort of beside the point. As you might imagine, Snapchat's value proposition isn't simply a function of how many users it brings onto its vanishing-video platform.

Snapchat's engagement is the key to its monetization efforts

Snapchat's perceived advantage over the likes of Instagram, Facebook, Twitter, and the rest of the social-media world is its uniquely engaged user base. According to reports this spring, Snapchat's 150 million-strong user base spends, on average, between 25 and 30 minutes on the service each day. We know users spend an average of 50 minutes each day in Facebook's three-pronged app ecosystem of Facebook, Instagram, and Messenger, and that figure doesn't reflect usage of Facebook's wholly owned WhatsApp subsidiary.

However, the amount of time users spend on a given social platform still doesn't perfectly describe their engagement. A cornerstone of Snapchat's pitch to advertisers, and a key differentiator between it and the likes of Facebook and Instagram, is that 60% of Snapchat users are creating some kind of content on the service each day.

As the thinking goes, users who are actively interacting with a service are more likely to interact with marketing messages from Snapchat's increasing cadre of advertising partners. Between its supposedly more attuned users and Snapchat's full-screen advertisement configuration, the company has reportedly been seeking advertising rates commensurate with those of broadcast television.

I'm becoming increasingly convinced that Snapchat is the future of online storytelling. The service, once considered a gimmick fit only for teenagers, has continued to press its advantages against the likes of larger incumbents like Facebook and its Instagram subsidiary. Social-media investors everywhere would do well to take notice.

The article Instagram Trumps Snapchat in Daily Active Users, but Does It Matter? originally appeared on Fool.com.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.