Has Instagram killed Snapchat yet?

Vanity metrics argue yes; actionable metrics say otherwise

Facebook announced last week that Instagram Stories has now reached 200M daily active users (DAUs). Compared to Snapchat’s 161M DAUs, alongside the slowing DAU growth rate, it is easy to jump to the conclusion that Snap is doomed, and soon to be dead as illustrated below. But is it really?


When assessing the revenue opportunity for Instagram and Snapchat, it ultimately comes down to core engagement metrics. This may also tie in DAUs, but looking at this metric alone, doesn’t give the full story. For example, would you rather have an app that has 100M users who each open the app once a day for 30 seconds, or 10M users who are actively engaged with the app for 30 minutes a day? Hypothetically speaking, if every 30 seconds, a user sees one ad and each ad generates $0.01, the app with 100M DAUs would make $1M a day, while the app with 10M DAUs would generate $6M per day. As a result, high level DAU metrics do not actually give us much insight into the potential market opportunity for either of these applications.

Digging into the core user engagement metrics may tell us a different story. Unfortunately, there is no available information on Instagram Stories’ engagement metrics, meaning this could just be a few highly followed celebrities adding one item on their story, and many people viewing it, but not actually actively engaging with Stories by sharing content, etc. Comparatively, the average Snapchatter spends 30 minutes a day on the app, with 60% of them creating content to share. This is an insanely high engagement metric for any application, and a huge opportunity for Snapchat to monetize on, which they’ve just started to experiment with.

Snapchat aims to differentiate itself in the market by going after a more mature user base, but one that is highly engaged, thus leading to a massive revenue opportunity. Facebook looks to do the same, but speaks more to the growth in DAUs as the core metric they report on. When you layer on the Instagram Stories DAU count with the fact that it was built ontop of Instagram, who has over 400M DAUs already, it becomes less impressive. 200M of Instagram’s 400M DAUs are actively engaging with a new feature, not adopting an entirely new Facebook product itself. This could also potentially mean cannibalization of Instagram’s core advertising products (outside of Stories) as the finite amount of time users’ spend inside of Instagram is now divided into the different features.

But now that we know that, what should we look out for? Since Facebook and Snapchat are both public now, it will be interesting to watch how their user engagement metrics change over time, how they are able to drive up their average revenue per user (ARPU) in each geo, and how each of their slightly different advertising products performs. This will ultimately help us to see who will dominate the (disappearing) photo market. In addition, since Facebook is the owner of Whatsapp, Messenger, and Facebook’s core app, alongside Instagram, and they have rolled stories into all of the different products, they may be looking to unify user stories across all products. Given the user engagement metrics across all of those products together, it may pose a potential larger opportunity to take Snapchat down. It also seems that there is some personal rivalry between Mark and Evan, as Mark Zuckerberg seems to want to wipe Snapchat from the face of the world.

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