Facebook Inc (FB): Let the Bite-Sized Video Wars Begin!

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In this age of instant gratification and information overload, it’s obvious that the average attention span of a human is now shorter than ever. Mobile technology has made us constantly desire new digital stimuli, yet we stay focused on each topic for shorter periods of time.

A look at the evolution of online video reveals this trend. Whereas Google Inc (NASDAQ:GOOG)’s YouTube gradually increased the length and quality of its videos as streaming technology and storage capacity improved, a new trend in bite-sized video, which has a maximum length of several seconds, has emerged.

Climbing the Vine

Facebook Inc (NASDAQ:FB)

Vine, a mobile app on iOS and Android that allows users to post six-second-long videos on Twitter and Facebook Inc (NASDAQ:FB), has 13 million users. The company was acquired by Twitter last October for $30 million. Although this technology appears to be a step backwards from the 1080p videos that users can now view on YouTube, its tiny videos have proven extremely popular with social network users. Many social network users often hesitate to watch full-length videos from their friends and family, yet they are more willing to watch tiny clips.

On the desktop platform, visits to Vine’s website grew from 77,000 unique visitors in January to 3.6 million in May, according to Compete.com. Vine’s mobile app doubled its U.S. iOS market from January to April, reaching 8% of iOS users with 13 million downloads.

Instagram makes Vine look prettier

Vine’s popularity has caught the attention of Facebook Inc (NASDAQ:FB), which recently announced that it was adding video to Instagram, the photo-sharing app that the company purchased for $1 billion last April.

Instagram, which has 130 million users, made a name for itself by adding digital filters which make smartphone photos look like Kodak Instamatic and Polaroid images. These filters, including 13 new video filters, are expected to give Instagram videos a unique, classic look that sets it apart from Vine.

In addition, Instagram will allow users to record 15 seconds of video in contrast to Vine’s six seconds. Instagram founder Kevin Systrom claimed that choosing the 15 second length was a “Goldilocks moment that just feels right.”

In my opinion, however, that longer length is not geared towards Instagram's users, but rather its advertisers.

Social marketing redefined

Over the seven years that it has owned YouTube, Google Inc (NASDAQ:GOOG) has struggled with monetizing its video streaming service. Today, YouTube users are required to watch "pre-roll" video advertisements that can be skipped after a certain number of seconds, and disruptive display ads that pop up over the video, which can be manually closed. It’s a clumsy system that clutters up YouTube, and the overall effect of these advertisements, which will be inevitably skipped or closed by users, is questionable.

Enter Vine and Instagram. Many companies are already exploring ways to monetize this rising trend in tiny video clips. Although Twitter is not currently selling advertising on Vine, that could change soon if the company goes public, as I have speculated in the past. Facebook Inc (NASDAQ:FB), on the other hand, is hungry for mobile advertising growth, and will likely reach out to advertisers to start producing Instagram video ads.

In terms of advertising, Facebook Inc (NASDAQ:FB) originally used the same approach as Google Inc (NASDAQ:GOOG) - by plastering its homepage with mundane display advertisements that few users clicked. Then Facebook Inc (NASDAQ:FB) got smarter. It started to add News Feed ads, which were more cohesive. Companies started to create company pages and encourage users to “Like” or “Follow” them to receive special promotions. In other words, advertisers use the social network to foster relationships with prospective customers, and that tactic worked far better than impersonal display ads.

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