Instagram passes Twitter in race for US smartphone users

Hannah Kuchler

Instagram has overtaken Twitter to become more popular with US smartphone users, highlighting the rise of the Facebook-owned photo-sharing app as it begins to sell advertising.

Nearly 35 million Americans used Instagram at least once a month last year, compared with 30.8 million using Twitter's mobile app, according to estimates from E-Marketer, the research group.

Justin Sullivan | Getty Images

Mark Zuckerberg announced this week that Instagram had hit 200 million monthly active users worldwide, having grown more than sixfold since he acquired it in 2012. Both sites were developed for mobile users first but Twitter has a greater desktop userbase, with 240 million active monthly users.

(Read more: Visionary or looney? Zuckerberg on spending spree)

The Instagram app, popular with teens who enjoy its flattering visual filters, has helped Facebook keep hold of a younger audience who are tiring of the main social network.

Facebook's founder and chief executive held up Instagram as an example of how his dealmaking tactics – in the spotlight after this week's $2 billion takeover of Oculus, the virtual reality headset maker – have a record of success.

Instagram was Facebook's first acquisition and it has followed the same model of allowing the company to operate independently, albeit with access to Facebook resources, with its recent purchases of chat app WhatsApp and Oculus.

(Read more: The curious case of vanishing tweets)

David Ebersman, Facebook's chief financial officer, said Instagram has done better than Facebook expected and the deal was a "nice proof point" of the group's M&A strategy.

Instagram slowly rolls out ads
Instagram slowly rolls out ads

Instagram has recently allowed paid advertisements by marketers and is slowly building a business with brand marketers. The first advert ran late last year and this month it announced a deal with Omnicom, its first partnership with an advertising agency.

Deborah Aho-Williamson, an analyst at E-Marketer, said Instagram is coming on "very rapidly" and that brand advertisers see it as a "beautiful branding platform" to showcase images and video.

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But she added that the app was unlikely to take marketers away from Twitter, which is further along in the process of monetisation.

"The use cases are so different. Instagram is so much about sharing photos and video and little graphics whereas Twitter is so much more real-time information and news," she said.

Twitter has grabbed the attention of brand marketers in the US, the largest advertising market, and is moving on to other areas of the world and direct marketing and e-commerce at home. Direct response would feel "a little weird" on Instagram, Ms Williamson said.

(Read more: Turkey's Twitter ban slammed by politicians, public)

Investors worried about Twitter's user growth slowing after its first earnings announcement last month. Shares fell almost 20 per cent as analysts quizzed the management about whether growth could ever accelerate in the US. The company is busy making changes to its platform and in particular the process of joining in an attempt to make it easier to understand for new users.