By Robert Hoff at Forbes:
Facebook FB +2.36% today introduced video to its photo-sharing app Instagram, instantly catapulting the social network into one of the most popular emerging activities online and suggesting a potentially huge new advertising revenue stream.
Facebook made the announcement at another of a recent series of press events on new products, this one in a stylish conference room scattered with easy chairs, couches, and small tables. The event was streamed live starting at 10 a.m. Pacific. As usual, there’s a wealth of coverage of the event, including aliveblog from Forbes’ Tomio Geron GERN +1.71%. I’ll provide just the highlights, mostly on the advertising implications.
Not surprisingly, Instagram CEO Kevin Systrom declined to speculate on those implications, repeating the mantra of Internet product folks that it’s all about the team users. But in brief comments afterwards, he told me that while he wasn’t sure what ad formats might result, he was “excited” to see what brands would do with the possibilities. The way some brands use the GoPro action video cameras suggests the possibilities, he said.
Building on a comment he made during a question-and-answer session at the event (see below), he said he thought the near-term opportunities for brands to use the video feature would be similar to how they’re using Instagram photos–which is to capture moments at events that build on the brand’s image.
For instance, he said, Burberry has been proactive about using Instagram to post photos of its models using its products and of its fashion shows (it has almost 850,000 followers on its Instagram page). Systrom said he expects Burberry to make more use of the video feature at its fashion shows and behind the scenes. Update: Wait. It already has. No wonder he mentioned it….
All that suggests that brands will be encouraged to do something new in video on Instagram and by extension Facebook, not just repurpose TV ads. It seems likely Instagram and Facebook users would react negatively to typical TV ads on either service, but it seems just as likely that advertisers will try it anyway.
Although the ad possibilities are tantalizing, Wall Street is more focused for now on the potential to keep Facebook and Instagram’s user bases growing and using the services. “We see video as a substantial opportunity for Instagram and FB, and believe the new video service and features will contribute to growth in users and engagement,” S&P Capital IQ analyst Scott Kessler said in a note to clients. But not immediately, judging from investor reaction. Facebook’s shares are down 2%, but that’s roughly comparable to the 2% drop in the overall market (thanks, Fed).
Here are those event highlights:
Mark Zuckerberg came on first to introduce a “big idea from a very small team.” And as expected, it’s the 12-person team at Instagram (now more than triple that) that Facebook acquired more than a year ago. “We’re really just getting started with this product,” he said.
Systrom said when they joined Facebook, a lot of people wondered what Instagram was, so he shared a bunch of photos, naturally, to show how it’s individual to each person using it, but all essentially sharing moments of their life.
Some 16 billion photos of Instagram have been shared, a billion Likes are logged every day. About 130 million people use Instagram.
Originally Instagram came from a service called Bourbon, which was a way to share location with photos–and videos. They put that aside because it was really hard to do video.
So much for the windup: As expected, he unveiled video for Instagram. Unlike Vine, which allows only six-second clips, video on Instagram will allow 15 seconds.
The service includes 13 new filters–a trademark of Instagram’s photo sharing–expressly for video.
One problem with mobile video is that often what you see is the first frame in the video, he said. That’s silly–people should be able to choose their still frame. So that’s what people will be able to do with video in Instagram. “This is the same Instagram we all know and love,” he said. “But it moves.”
Another key feature called Cinema stabilizes video so it doesn’t look so shaky anymore. “This changes everything,” he said. And indeed, it looked pretty impressive.
The press here had a bunch of questions, in particular on advertising (a few questions down here):
Q: Will videos post natively on Facebook news feeds? Systrom said yes, just like a Facebook video.
Q: How much infrastructure load is this compared with Instagram photos? Systrom said it was a big undertaking, but he said the team has optimized it enough that he doesn’t think it will be an issue.
Q: Why is six seconds not long enough? It’s an artistic choice, Systrom said. In testing, 15 seconds felt right.
Q: Can you combine 15-second clips into longer clips? You can export the full video to the phone’s camera roll, so editing can be done afterward, he said, but the point is to make it simple, so that’s not something Instagram is emphasizing.
Q: What about the branding opportunities? This is really driven by consumer demand and not by business need, Systrom said. There’s a natural business opportunity there. Over time, we’ll figure out how advertising … will be OK on Instagram. But for now, we’re perfectly happy with how brands are interacting on Instagram, which is organically.
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