Twitter takes a mild beating from Instagram

Twitter must feel bereft and be developing an inferiority complex. AllThingsDigital, via an unpublished ComScore report, unveiled that Facebook's photo-sharing service, Instagram, bested Twitter for August in mobile app daily engagement. According to the report, Instagram averaged 7.3 million daily active users (DAUs) in the U.S. and Twitter a mere 6.87 million. In addition, Instragram users spent 44 percent more time than Twitter users in their respective mobile apps. And, Twitter has 25 percent more smartphone users than Instagram, 29 million versus 22 million, according to ComScore.

It turns out that more people in the U.S. like to spend more time taking, sharing, and gazing at pictures than tweeting and reading tweets. But don't worry Twitter, many of those more than 80 million registered Instagrammers are flowing their pictures into Twitter, and you are going to pep up your own image-sharing service, especially now that you have new restrictions on other photo-sharing services that use your API. And, with more than 60 percent of 140 million active users on mobile devices, and more than 400 million 140-character-or-less word pictures per day around the world, life is good, and the revenue is flowing.

eMarketer estimated that Twitter revenue will reach $259.9 million in 2012, $339.5 million in 2013, and $540 million by the end of 2014. Bloomberg reported that Twitter could reach $1 billion in sales in 2014. On the mobile front -- more than 60 percent of its users are on mobile devices -- eMarketer predicts Twitter will gain about half of its 2012 revenue, $129.7 million, from U.S. users on mobile devices.

Instagram's August ComScore metrics are good news for Facebook, which has been struggling to come up with mobile greatness, especially from a monetization standpoint. It collects a lot of data with each photo, but what target ad do you serve with a railroad track photo at 48.7597° N, 122.4869° W? Amtrak tickets to Seattle? Puma ads because you've been tracked window shopping on Zappos?

It's not that clear how Facebook can turn Instragram into a cash machine on a smartphone. eMarketer predicts Facebook, with an estimated 57 percent of its 1 billion users accessing its services on mobile devices, will book $5 billion in overall revenue, but only $72 million in U.S. mobile ad revenue -- far less that Twitter's U.S. mobile take. However, the mobile ad game is just beginning, and both Facebook and Twitter will be winners. By 2014 more than 75 percent of users could be on mobile devices, and Emarketer expects Facebook's U.S. mobile revenue to reach $629.4 million, versus $444.1 million for Twitter.