While a lot of people on Wall Street have said Facebook should be concerned about Snapchat, one analyst says it’s really Twitter that ought to be more worried.

According to James Lee at Credit Suisse Group, it looks like the dollars that advertisers are putting towards Snapchat are being taken away from the Twitter rather than Facebook.

“Snapchat’s reach-and-frequency targeting suits brand advertisers that traditionally buy a lot of TV ads,” the internet analyst said in a new note, which was based on conversations he had with advertising consultants. The upshot: “The competitive impact on Facebook, Instagram and YouTube is limited. However, they are seeing more pressures on Twitter.”

That helps to make the purchase of Instagram sound like one of the best decisions Facebook founder Mark Zuckerberg has made. According to Lee, a lot of new ad-pricing increases will come from Instagram, and the gap between what the company charges for advertisements on the two platforms will get smaller.

“Instagram will likely gain pricing leverage on new direct-response products like dynamic product ads and close the pricing gap between Instagram and Facebook, with increased competition for bidding as conversion characteristics are similar between the two platforms,” he wrote. “At the same time, Instagram will likely gain inventory leverage as the platform reduces organic reach through its latest algorithm change to base on relevancy as opposed to time.”

Brian Nowak at Morgan Stanley made a similar argument last month when he said that Facebook appeared to be shrugging off the growing use of Snapchat. “We don’t believe Snapchat is having a material impact on Facebook’s engagement or daily active user (DAU) growth,” he said at the time.

Instagram has just launched a disappearing video option in its app, closing a gap with Snapchat’s functionality.


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