Teens, Millennials or Women: Which customer segment will drive the future of Instagram?

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Key Findings

• Instagram’s US user base will grow to 50.6 million by the end of 2016, a 46% increase from its user base in 2013. However, the year-on-year growth rate peaked in 2013 and is on a decline. In 2016, the growth rate will fall to 10% – most likely the final year of double-digit growth rates.

• Youth will continue to remain the largest customer segment among Instagram users in the US. In 2013, there were 22.1 million Instagram users below the age of 35 i.e. 64% of all US Instagram users. This demographic segment will grow to 60.7 million by the end of 2016 accounting for 60% of all US Instagram users.

• In 2013, there were only 3.7 million US teens (age 17 and below) on Instagram compared to 18.4 million US millennials (18-34 year olds). The trend will continue until 2016 when teens will account for only 13% the US Instagram user base while the share of US millennial users will be 48%.

• Instagram had surpassed both Twitter and Facebook to become teens’ single “most important” social network. Facebook had plummeted from being the most important social network for 42% of teens in Fall 2012 to just 23% in the spring of 2014. By contrast, the percentage of teens citing Instagram as their most important has surged from 12% to 30% in the same time period.

• The three reasons that led Instagram to replace Facebook in the minds of US teens are: Low cost of social interaction, Crowding out effect on Facebook, and Culture of emotional expression.

• Teens and millennials are still on Facebook but they are using it as a directory to collect people on their friends list. The average number of Facebook friends for 12-17 year olds in the US increased from 506 in 2013 to 521 in 2014. Among 18-24 year olds, the increase was significantly higher rising from 510 in 2013 to 649 in 2014.

• 42% of 18-29 year olds in the US said none of the social networks or apps qualified as being indispensable showing a lack of loyalty towards any social networking platform.

• Women could be a the new demographic segment that drives Instagram’s growth. 68% of women aged 25-54 in the US report spending more time on Instagram than 6 months ago, ahead of Blogs (48%), Pinterest (48%) and Facebook (30%).

• US millennial users of Instagram show a strong preference for smartphones while adult users prefer using Instagram on tablets. 60% of Instagram’s smartphone users in the US are below the age of 35. 54% of Instagram’s tablet users in the US are 35 years old and older.

Introduction

Facebook acquired Instagram because teens were rumored to be abandoning Facebook for Instagram. While teens consistently rank Instagram as their most important social network, they aren’t the driving force behind Instagram’s growth story.

Most of the mainstream coverage on Instagram revolves around teens posting selfies. According to selfiecity.net, only 4% of pictures posted on Instagram are selfies. Majority of Instagram images tend to be about mundane everyday aspects of life such as pets, food, houses, shoes, feet, friends, strangers etc.

People are creating a digital footprint of their lives on Instagram. And most of them are millennials who have been part of Instagram’s growth in the US since the days when hipsters discovered apps that apply filters to their iPhone pictures.

While millennials will continue to be the biggest user segment for Instagram for the next couple of years, the photo sharing service needs to look beyond youth for new growth opportunities or risk losing its subscribers to new rising stars such as Snapchat.

Instagram user growth hits its peak in the United States

Instagram, one of the fastest growing social media apps in the US, has evolved from just another photo sharing app to a visual storytelling and communication tool for both consumers and brands.

jpeg 64 percent of US Instagram users are below the age of 35.001_

Instagram’s user base is expected to continue growing till 2016. The photo sharing service’s US user base will grow to 50.6 million by the end of 2016, a 46% increase from its user base in 2013. However, the year-on-year growth rate peaked in 2013 and is on a decline.

In 2013, Instagram’s US user based increased by 35% – from 25.7 million in 2012 to 34.6 million in 2013. The growth rate will more than halve by the end of 2014. There will be 40.5 million Instagram users in the United States in 2014, a 17% increase in 2013.

In 2015, the user base will increase by 13% to 45.8 million and in 2016, the growth rate will fall to 10% – most likely the final year of double digit growth rates.

Youth continue to dominate US Instagram user base

As Instagram’s US user base grows from 2014 to 2016, more than half of all users will continue to be below the age of 35.

Youth will continue to remain the largest customer segment among Instagram users in the US. In 2013, there were 22.1 million Instagram users below the age of 35 i.e. 64% of all US Instagram users. This demographic segment will grow to 25.2 million by the end of 2014 accounting for 62% of all US Instagram users.

Youth share of Instagram’s US user base will decrease only slightly over the next 2 years. By the end of 2016, the below 35 demographic segment will grow to 60.7 million accounting for 60% of all Instagram users in the US.

Millennials, not teens, have driven Instagram’s US growth

While mainstream media continue to focus on US teens posting selfies on Instagram, data tells us that millennials not only constitute a larger user base but will also drive Instagram’s growth in the US.

In 2013, there were only 3.7 million US teens (age 17 and below) on Instagram compared to 18.4 million US millennials (18-34 year olds). Teens accounted for just under 11% of Instagram’s total user base while millennials made up 53% of all users.

18-24 year olds made up the largest customer segment at 27% of the user base, closely followed by 25-34 year olds who made up 26% of the user base.

US millennials will continue to dominate Instagram’s US user base in 2014 with 20.4 million users in the 18-24 age accounting for 50% of all users. Teens will account for only 12% of the user base with 4.8 million users.

The trend will continue until 2016 when teens will account for only 13% the US Instagram user base with 6.5 million users. On the other hand, the number of US millennial Instagram users will increase to 24.2 million while its share of the total user base will only slightly decrease to 48%.

Instagram, lacking in market share, grabs teen mind share

The obsessive linking of teens and Instagram in the US is largely driven by a poll that tracks teen ratings of social networks on a basis of perceived ‘importance’.

The poll has consistently shown that over the last two years, teen social networking platform preferences are rapidly changing in the US.

jpeg Instagram surpasses Twitter and Facebook as most important Social Network for US Teens.001_

In the fall of 2012, Facebook was the undisputed leader of social network not just in terms of market share but also mind share. 42% of US teens rated Facebook as their most important social network, well ahead of Instagram at 12% and Twitter at 27%.

By spring of 2013, Facebook’s appeal had fallen significantly with only 33% of US teens rating the social network as most important. This was on part with Twitter rated most important by 30% of US teens. Meanwhile, Instagram’s influence had grown as 17% of US teens rated it as most important.

In the fall of 2013, only 23% of US teens rated Facebook as the most important social network. Instagram was now on par with Facebook as 23% of teens rated the photo sharing apps as the most important social network. Twitter, meanwhile, had hovered in the 26-30% range, took the lead virtually by default as Facebook’s appeal slumped.

Finally in the spring of 2014, Instagram established itself as the undisputed leader of teen mind share with 30% of US teens rating it as the most important social network compared to 27% for Twitter and 23% for Facebook.

Instagram had surpassed both Twitter and Facebook to become teens’ single “most important” social network. Facebook had plummeted from being the most important social network for 42% of teens in Fall 2012 to just 23% in the spring of 2014. By contrast, the percentage of teens citing Instagram as their most important has surged from 12% to 30% in the same time period.

3 reasons why US teens prefer Instagram over Facebook and Twitter

The three reasons that led Instagram to replace Facebook in the minds of US teens are:
1. Low cost of social interaction,
2. Crowding out effect on Facebook, and
3. Culture of emotional expression

Teens preferred mobile apps like Instagram because signing up was easier. There was no hassle of building and maintaining a profile. They could use their real name or a nickname. They could upload their image or choose to remain completely anonymous.

There was also no pressure of getting a friend request ignored or the awkwardness of having to accept a request from someone they weren’t fond of. They could follow people they knew in real life and strangers. They could use hashtags to find people who lived in their area or shared common interests with them across the world.

At the same time, their parents and teachers were starting to sign up to Facebook either out of curiosity or fear or both. Parents might have wanted to connect with their peers but at the same time they could keep an eye on their child’s Facebook activity making it difficult for teens to communicate with friends using inside jokes and sarcasm.

Sharing viral videos and team pictures on Facebook wasn’t going be as meaningful as sharing their opinions on homework, chores and the often ridiculed reasons why life is unfair for a teen. They had to find a new platform and Instagram was ideal largely because it didn’t have parents and teachers yet.

The reasons for teens adopting Instagram over Facebook as stated above could easily have applied for Twitter as well. However, Brands, celebrities, news services and self-proclaimed social media experts had been using Twitter to create a culture of functional communication around offline events such as earthquakes and award shows. Teens, on the other hand, wanted to share personal emotions about mundane things in their daily social lives. Instagram was an unclaimed territory with all the required bells and whistles.

Facebook is still relevant as an address book, but conversations happen on Instagram

A greater preference for Instagram, however, does not translate to a teen exodus from Facebook.

Teens and millennials are still on Facebook but they are using it as a directory of sorts to collect people on their friends list.

jpeg US youth on Facebook have more friends than a year before.001_

The average number of Facebook friends for 12-17 year olds in the US increased from 506 in 2013 to 521 in 2014. Among 18-24 year olds, the increase was significantly higher rising from 510 in 2013 to 649 in 2014.

Facebook as an address book still presents immense functional value to the US millennial consumer – enough to make it their top indispensable social network.

jpeg US youth rate Facebook at the top indispensable social network.001_

Among the five big social networks – Facebook, Google, Twitter, YouTube and Instagram – 24% of 18-29 year olds in the US chose Facebook as the one website, social network or app that they could not live without.

Facebook was ahead of Google (7%), Twitter, YouTube and Instagram (3% each).

In other words, while Instagram has the teen mind share, it still needs to work on winning the US millennial mind share.

More importantly, 42% of 18-29 year olds said none of the social networks or apps qualified as being indispensable. This shows a lack of loyalty towards a social networking platform among US youth. They would easily switch if a new platform were to come along with slightly better features. It’s what happened with Facebook, forcing the company to purchase Instagram for a billion dollars.

Acquiring the new rising star in social media (e.g. WhatsApp) is not a sustainable long-term solution. The challenge for Instagram’s parent company now is not only to win mind share in demographics beyond the US teen segment, but also to instill loyalty towards the platform among customers.

US women spending more time on Instagram than any other social network

In expanding its mind share beyond teens in the US, Instagram should focus on the online female segment in the 25 and above age bracket.

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US women aged 25-54 are using Facebook as an address book to collect people on their friend list. They had on average 250 friends on Facebook – more than Twitter (163), Blogs (149), LinkedIn (101) and Instagram (89).

The small number of connections for Instagram and an even smaller number for Pinterest (67), suggests that adult female consumers in the US derive value from Instagram and Pinterest by sharing their updates with a small group of peers instead of trying to build a following as they would do on Facebook, Twitter or a blog.

While number of connections on Instagram among US women is low, they are spending more time on the photo-sharing app than any other platform.

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68% of women aged 25-54 in the US report spending more time on Instagram than 6 months ago, ahead of Blogs (48%), Pinterest (48%) and Facebook (30%).

In fact time spent on Facebook and Pinterest has been decreasing. US women claim that they spend less time on Facebook (22%) and Pinterest (23%) now than they did 6 months ago.

As women spend increasingly more time on Instagram with their close-knit network, they seek a better experience in communicating their emotions and telling their story.

Adults prefer using Instagram on tablets, youth prefer smartphones

One way of improving the Instagram experience among adult female users in the US is to focus on how they use the photo sharing service.

While Instagram continues to remain a mobile only social network, its smartphone and tablet user base differs significantly across age groups in the US market.

In general, millennial users of Instagram show a strong preference for smartphone over tablet while adult users prefer using Instagram on tablets.

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60% of Instagram’s smartphone users in the US are below the age of 35 – 31% in the 18-24 age group and 29% in the 25-34 age group.

Young US consumers are more likely to have their smartphones with them at all times. It is, therefore, not surprising that majority of content posted on Instagram depicts the mundane and exciting parts of a young person’s social life – the food they eat, the pets they love, the friends they have, the places they visit and much more.

Tablets, on the other hand, are mostly used as a family device in homes, a study tool in school, or a workstation in the office. It is natural then for female adults to turn to tablets when they have to use Instagram. 54% of Instagram’s tablet users in the US are 35 years old and older.

Users are more likely to pick tablet over smartphone as we move up the age brackets.

35-44 age bracket: 21.5% of Instagram tablet users in the US are in the 35-44 age group compared to 19.7% of Instagram smartphone users.

45-54 age bracket: 13.8% of Instagram tablet users in the US are in the 45-54 age group compared to 11.4% of Instagram smartphone users.

55-64 age bracket: 14.9% of Instagram tablet users in the US are in the 55-64 age group compared to only 7.2% of Instagram smartphone user.

The choice of device and age of the user plays an important role in the type of content shared on Instagram. Young people using their smartphones to post on Instagram are more likely to share emotional content with their friends and family. While female adults using tablets to post on Instagram are more likely to share functional content such as products they are interested in purchasing, recipes they are excited to experiment with or fitness routines they are proud of completing.