Facebook (FB) Introduces Instagram Video

Social media giant Facebook (FB) recently announced that it was adding video capabilities to its photo-sharing app, Instagram. Although the initial announcement seemed mundane, the arrival of Instagram video tilts the tables significantly in Facebook's favor in its long-running tug-of-war contest with microblogging site Twitter. It also opens up exciting opportunities in mobile advertising for Facebook, which is the current leader in social e-commerce revenue, with a 36% market share.

Twitter comes in second, at 20%, followed by Pinterest at 15% and Google (GOOG) at 6%. How can adding video to Instagram change the social e-commerce game? Let's take a look at the key facts. Daily Chart
Facebook's $1 billion acquisition of Instagram last April has long been ridiculed by Wall Street as a pointless impulse buy that had no real growth value, despite the app's 130 million users. Instagram is best known for its filters, which can give smartphone photos a warm, retro quality reminiscent of Polaroid and Instamatic images. For its newly added video function, Instagram is introducing 13 new filters. These videos are limited to 15 seconds each and can be shared in the same way as regular photos. This new feature doesn't seem particularly important until it is compared to Vine, which Twitter acquired last year $30 million. Vine offers a similar service, in which users record videos limited to six seconds, which can also be posted across various social networks and websites. This new craze in "bite-sized" videos has taken off this year. Vine's mobile app doubled its iOS market share in the United States between January and April, reaching 8% of iOS users with 13 million downloads. Visits to its domain, vine.co, surged from 77,000 unique monthly visitors in January to 3.6 million in May, indicating a huge surge in interest in this new micro-video format. At 13 million active users, Vine is still a tenth the size of Instagram, but its rising popularity has apparently caught Facebook's eye. For Facebook, adding 15-second videos to Instagram could give companies a whole new medium to deliver ads. Several companies, including Burberry, have already released Instagram videos to test out the new format. When Instagram and Facebook's News Feed ads are used in tandem, advertisers could find new ways to draw from both sites to boost sales. For example, companies can use paid News Feed advertisements to spread their Instagram videos, which can then be spread virally to reach an even larger user base. Vine, by comparison, does not offer paid advertising yet. However, that could change if Twitter goes public later this year, as some analysts have speculated. It's obvious that Facebook sees Twitter as a threat. The company recently added hashtags, which have long been part of Twitter's culture, to its News Feed, in order to catch up on the public's obsession with trending topics. Hashtags can also be added to television broadcasts and live events for immediate updates. Adding Vine or Instagram videos will now become an integral part of that culture. It will be interesting to see how this new battle shapes the future of social e-commerce. Other News About FB Facebook Takes On Twitter With Video Facebook adds video to Instagram. Bug Exposes Contacts of Some on Facebook Facebook catches a cold. Other Stocks in the News Dreaming of Robot Doctors and Electric Cars Are these the stocks of the future? Make Way For The New Toys On the Block! Check out these new hybrid toys. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Jun 24, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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