Almost there.

Despite intensifying competition among social photo/video sharing platforms, user growth on Facebook's (NASDAQ:FB) Instagram is actually accelerating. Instagram announced today that it has now reached 700 million monthly active users, noting that "the last 100 million of you joined faster than ever." For the record, the service had previously hit 600 million in December 2016, so it added 100 million users in just over four months. It took roughly six months to garner the previous 100 million users, and nine months for the 100 million before that.

The user base has now doubled over the past two years, and it's well on its way to hitting 1 billion. When that eventually happens, Instagram will become Facebook's fourth billion-user platform.

Chart showing Instagram user growth accelerating

Data source: Instagram. Chart by author.

Fourth time's the charm?

Facebook's core platform hit 1 billion users in October 2012, just months after going public. The next platform to cross the 10-digit threshold was WhatsApp in February 2016, which was followed shortly by Messenger in July 2016. It goes without saying that the core Facebook ad platform has been paying the bills all these years, but Instagram is different than WhatsApp and Messenger in arguably the most important way: monetization.

Monetizing free messaging platforms is generally a tricky proposition, and one that remains a work in progress for Facebook (including both Messenger and WhatsApp). There are some outlines of the strategy here: connecting businesses with consumers, facilitating e-commerce transactions with AI bots, adding an ad carousel. There's a lot of potential and it's very likely just a matter of time before Facebook hits its target, but the strategy here is neither fully baked nor certain to succeed.

Instagram Story featuring a cat shooting lasers out of its eyes

Instagram Stories are taking off in popularity. Image source: Instagram.

In contrast, building the Instagram ad platform is far more straightforward, and something Facebook has plenty of experience in. While in messaging, Facebook needs to come up with a strategy and execute amid uncertainty, the company already knows the route it'll take with Instagram and just needs to focus on executing a familiar strategy. There are now over 1 million active advertisers on Instagram. Instagram Stories is already taking off, and now has over 200 million people using it on a daily basis, less than a year after launch.

Mark Zuckerberg has often said that 1 billion users is a key threshold to begin monetization. For example, in 2014 Zuckerberg said, "Products don't really get that interesting to turn into businesses until they have about 1 billion people using them," referring to when Facebook would start earnestly working on building WhatsApp as a business. But given Instagram's fundamentally greater financial potential as an ad platform, it's a far more important service to get to 1 billion than messaging services. It's also not as if Facebook waited for Instagram to hit 1 billion before cranking up the monetization.

If user growth rates hold steady or continue to accelerate, Instagram looks on track to hit 1 billion users by late 2017 at best or early 2018 at worst.

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