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

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.

Companies as friends

Therefore, merging that system of “companies as friends” with Instagram video could be a brilliant move for Facebook. That’s why I believe Facebook increased the length of its Instagram videos to 15 seconds – to give advertisers more time to get their point across. Burberry has already demonstrated those possibilities in its Instagram video, and there have already been plenty of responses from the company’s fans.

Although creating viral Instagram video ads won’t immediately generate ad revenue for Facebook, the eventual convergence of the brands on Instagram and Facebook will. Companies that enjoy success with their Instagram videos will be more likely to buy News Feed ads to keep growing their fan base, to guarantee that future videos will be seen by a larger audience.

In addition, Instagram video ads will work across all platforms and devices, solving Facebook’s previous problem of being unable to monetize display ads on mobile platforms. Smaller businesses could also participate by merging their Facebook pages with Instagram accounts.

A win-win-win situation

Over the past year, Facebook Inc (NASDAQ:FB)’s purchase of Instagram has been constantly mocked by financial media as a pointless splurge. I believe that the addition of Instagram video could be the watershed event that proves these critics wrong.

Users get a new way to share fresh content. Advertisers get a new medium to use to create viral media. Most importantly, Facebook gets to collect more data from both the former and the latter, to better mold its future growth initiatives.

Instagram video also allows Facebook Inc (NASDAQ:FB) to stay on even footing against Twitter and Vine. Facebook recently added hashtags to tap into the public’s obsession with trending topics. Twitter expanded its media presence by capitalizing on the “second screen” movement, encouraging users to tweet their opinions and pictures during TV shows and live events.

Instagram and Vine, when combined with trending hashtags, could become a major tool in this battle for social networking dominance.

The Foolish bottom line

In conclusion, Vine and Instagram’s micro-videos are a step forward and backward at the same time. In terms of technology, they are more akin to the animated GIFs of the past than the HD videos of the present. However, in terms of social sharing across multiple platforms, they are cutting edge.

Just as Twitter’s 140-character restriction forced people to state their point in as few words as possible, I believe that Vine and Instagram will open the floodgates to creative short videos, from users and advertisers, that will push the limit of what they can say in a small 6 to 15 second time frame. The results will be fascinating, and could redefine how companies approach Internet advertising in the future.

The article Let the Bite-Sized Video Wars Begin! originally appeared on Fool.com and is written by Leo Sun.

Leo Sun owns shares of Facebook. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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