Those investors still betting on Facebook stock got hopeful news today as CEO Mark Zuckerberg announced a Facebook video sharing capability – courtesy of Instagram.
"A small team has been working on a big idea. Join us for coffee and learn about a new product," read invitations sent from Facebook Inc. (Nasdaq: FB) to select journalists and media outlets for an announcement today.
The news was Facebook's attempt to capitalize on the popularity of video sharing – which has led teens, tweens and young adults to ditch Facebook for apps like Twitter's Vine.
CEO and co-founder Mark Zuckerberg opened the event by talking about the website's most popular services and how they work on mobile. Then, Instagram CEO Kevin Systrom had the honors of unveiling the hugely popular photo sharing app's new video sharing capabilities.
In building the service, Systrom said the focus was on simplicity, beauty and community.
"The interface is almost exactly the same [as Instagram], just with an added video button," he said.
Instagram videos will be short clips up to 15 seconds long, and users will tag and caption the videos as they currently do on Instagram photos.
In addition, Instagram created 13 brand new, custom filters for video. Plus, there is a cover frame function to improve how videos look on mobile devices.
New Facebook Video Sharing a "Real Opportunity"
Facebook acquired Instagram in April 2012 for approximately $1 billion in cash and stock.
In January 2013, Instagram reported it has 90 million users who post 40 million photos per day and tap 8,500 likes per second.
But it was impossible for users to integrate their images into tweets.
So, Twitter launched Vine in January, an Instagram-style smartphone app, which allows users to post and share short six-second videos. It ranks among the most popular apps for Apple Inc.'s (Nasdaq: AAPL) iPhone.
After numerous Facebook product launches have disappointed analysts, this one could finally be a winner…
"I think it will be a cool feature," Wedbush analyst Michael Pacther told MarketWatch. "The Instagram audience is important to Facebook, given the much younger and more female dominated membership, and I think it is important for Facebook to pay attention to this audience and give them something different."
Marc Poirer, co-founder of Acquisio, which helps companies manage online marketing campaigns, agreed.
"Here is a real opportunity to monetize Instagram, which becomes an attractive ad medium for brands seeking to engage with audiences," he told MarketWatch.
Facebook Hits 1 Million Advertisers
In a fresh sign that it has indeed become a conventional advertising portal, Facebook just announced it has hit 1 million advertisers.
The social media giant claims more than 2 billion connections between members and local business, with some 70% of users in North America connected to a local business. On average, local business Facebook Page produces 645 million view and 13 million comments.
That suggests small and medium sized businesses are apt to be Facebook's real cash cow this year.
"While some observers might read this data as implying weakness in growth from other segments of advertiser, we view this positively, as it speaks to the predictability and durability of the company's revenue growth," Brian Wieser, an analyst at Pivotal Research Group wrote in a note to clients.
To be sure, a one million advertiser base indicates Facebook has succeeded in garnering local businesses that aim to reach a select, curated and targeted audience on Facebook based on where they live.
In attempts to attract even more advertisers, Facebook recently debuted a revamped site that features small business success stories and tips for more effective advertising. Also, Facebook included a link where business can share their stories.
It's all part of Facebook's push to monetize it 1.1 billion member-base, and a way to appease disgruntled shareholders.
Thursday's news did little to goose Facebook stock, which slid 2% following the event. Trading around $23.85, the stock is down some 40% from its IPO price of $38.
Advertising could be the saving grace for Facebook and its stock. Check out this interview with an industry advertising pro on how Facebook's ad changes could be a game-changer: If this Works, Facebook Stock Could be the "Buy of the Decade"
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