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Facebook Stretches Video Power On Its Next Big Moneymaker

Facebook Stretches Video Power On Its Next Big Moneymaker

Taking a big step on its path of being a video behemoth that spurs ad revenue, Facebook (FB) on Tuesday boosted the power of Instagram.

Users of Instagram will now be able to record videos of up to a minute, vs. its previous load of 15 seconds. The update is available just to a small group to start but that will expand to everyone in the coming months, Instagram said in a blog post.

Facebook began offering advertisers on Instagram the freedom to post 60-second ads, up from 30 seconds previously, in February. Facebook derives more than 96% of its total revenue from advertising, with video ads drawing a premium price. More video is now viewed on Facebook than any other system except for the YouTube platform owned by Alphabet (GOOGL).

Facebook does not break out Instagram revenue, but analysts estimate that its sales could top $1 billion this year. Analysts have kept a close watch on Instagram as a key revenue-growth leg for the social media leader. Facebook and Instagram are the company’s two most important mobile ad platforms, company executives say.

Facebook has always closely monitored user engagement and satisfaction before expanding ads. Allowing users to now post 60-second videos on Instagram should enable Facebook to closely monitor and analyze how active and engaged viewers are with longer-form video on the Instagram platform. The time that people spent watching video on Instagram has increased more than 40% in the last six months, Instagram said in a blog post announcing the video expansion.

Facebook began testing ads on Instagram about three years ago. One month ago Facebook announced it now has more than 200,000 advertisers on Instagram.

Facebook competes with Apple (AAPL), Alphabet, Microsoft (MSFT), Twitter (TWTR) and others to attract more advertisers.

Instagram is one of multiple growth engines that Facebook can accelerate.They include Facebook Messenger and WhatsApp. While Instagram has more than 400 million users, WhatsApp has about 900 million users and Messenger more than 800 million. Facebook is in position to make its widely popular Messenger platform an all-in-one tool that could include a partnership or a battle with Apple and its Apple Pay system.

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