Earlier this month, Vine surpassed Instagram in Twitter shares. More people are opting for the more versatile format Vine offers over the still photos you can share through Instagram.
Perhaps that’s why Facebook Inc (NASDAQ:FB) is rumored to be adding Vine-like video support to Instagram later this month. With 35.5% of iPhone users on Instagram every month, compared to just 10.7% for Vine, Facebook has an opportunity to leapfrog Twitter in the growing short-form video market.
Interestingly, Vine’s growth has been mostly in the United States. It also has a wide reach in Norway and New Zealand, but its global presence remains very small compared to Instagram’s. There’s opportunity for Facebook to tackle major European and Asian markets before Vine becomes popular by leveraging its Instagram user base.
If Facebook can beat Vine to those markets and engage a large portion of its 100 million active users, it may be the final push Facebook needs before reaching critical mass and monetizing Instagram. Popular brands are already on Instagram posting pictures. Give them a video platform as well, and they’ll be clamoring for a way to reach a wider audience. Instagram already has a wide adoption of hashtags, so the path to monetization seems pretty clear.
Video advertising is one of the fastest growing segments of online advertising. What was once a miniscule $347 million back in 2004 in the early days of video streaming has ballooned into a $12.5 billion industry in 2012.
Google’s YouTube is at the forefront of the trend, generating an estimated $1.4 billion last quarter alone – 10% of Google’s total revenue. 25% of that was through mobile, the platform for which Vine and Instagram are made. In fact, YouTube has seen its biggest growth on the mobile platform as mobile users account for 40% of total views.
Facebook Inc (NASDAQ:FB) and Twitter may be sitting on the next part of the mobile video advertising story. But with just 10% the number of users on Instagram, 1.3% on Vine, compared to YouTube’s 1 billion users, neither company could expect to see revenues on the same level of YouTube for awhile. As the short-form video rapidly gains popularity, however, it presents a big revenue growth opportunity once effectively monetized.
If imitation is the sincerest form of flattery, Twitter must feel pretty flattered right now. But it should also feel threatened. Facebook is coming after its biggest source of revenue and taking on its fastest growing segment. I won’t be surprised if Twitter takes steps to further distance itself from Facebook and Instagram.
For Facebook, both these steps signify the opportunity it has to continue growing revenue. A “Super Bowl-sized audience every single night” and another 100 million-plus monthly users through Instagram should get advertisers salivating. Facebook is definitely positioning itself as the place for advertisers to reach a highly targeted audience.
The article @Facebook Wants to be Like #Twitter originally appeared on Fool.com and is written by Adam Levy.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Adam 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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