Snapchat’s Pre-IPO Nightmares: Instagram Launches Ads On Stories To 150 Million Daily Users

Instagram has announced the launch of ads in Stories. Stories are a feature pinned at the top of Instagram’s user feed, enabling them to showcase and browse photos and videos of other users. Instagram Stories is infamous for being heavily inspired by Snapchat’s features. The main ad formats are 5 second pictures and 15 second videos rolling between Stories. The ads are skippable.

The more important part of the announcement however, is that 150 million Instagram users now use Stories daily. Which is the same as the last reported user number by Snapchat. With the company approaching its IPO, the last thing it needs, amidst the pressure of honing its own business model while sustaining user growth, is an alternative proposition for advertisers by its competitor, with matching metrics and robust sales & support teams.

Additionally, while the Instagram’s Stories bar is featured at the top of the screen to optimize for reach, Snapchat has moved its Discover feature to the bottom of consumer’s feed screen, in order to improve user experience. While this move could decrease reach for advertisers, it could arguably improve the quality of the audience and thus, engagement with the ads.

It will be interesting to observe and compare these tactics as they show their mid-long term effects. For now however, the Instagram Stories milestone is yet another thorn in Snapchat’s eye, facilitated by Facebook Inc. in a bid to mitigate the success of its upcoming IPO. The aim is to do as much damage as possible before Snapchat gains access to a large amount of public capital and is able to up the competitive ante.

When Snapchat declined Facebook’s acquisition offer in 2013, it might have not fully realised that the social media behemoth was out to get Snapchat the easy way or the hard way. Snapchat is by no means a lost cause, but it better brace itself for an on going barrage of major and minor competitive nudges from Facebook prior to its IPO. Snapchat’s ability to withstand this pressure will directly affects the amount of capital it will be able to raise through the IPO. And that directly dictates the degree to which it will be able to increase its competitive efforts and power in the post-IPO days.