Instagram's CEO Is Counting on Selena Gomez, Kevin Hart and 500 Million More to Win Digital Media's New Game

In Menlo Park with Kevin Systrom as his billions-a-year company guns for its share (and more) of the coming $17 billion market in digital video with an unfiltered swipe at rival Snapchat and help from celebrity friends.

It's a scorching July afternoon, and a soundtrack of pop hits is bumping inside a cavernous Hollywood photo studio where Selena Gomez and Kevin Hart have gathered for a shoot with Instagram CEO Kevin Systrom. The singer and comedian have spent the past few hours prepping with stylists for a series of professional, meticulously crafted photos seen here. But at the moment, Gomez, her petite frame decked in chic separates by The Row and Calvin Klein, has co-opted the set, motioning for the equally diminutive Hart to pull his tiny white Ferrari closer to the humongous black Dodge Ram truck she arrived in a few hours earlier. "We've got to get this shot," she says, leaning back on the sports car as a crowd of handlers andTHR staff forms around them. Gomez motions to the onlookers, theirPHONESraised in unison, ready to capture the moment as Systrom looks on with a smile. A few hours later, Hart posts the photo on his Instagram page; within days, it quickly amasses more than 350,000 likes.

In the fast-moving world of social media, where Snapchat is the new Twitter is the new Facebook is the new MySpace, Instagram has managed to mostly steer clear of the are-they-cool-or-aren't-they debate. Less than 6 years old, the company — co-founded by Systrom and owned since 2012 by Facebook as an independent division — recently topped 500 million users (leaving Twitter's 310 million in its wake and nearly a third of the way to Facebook's 1.65 billion) and is the app of choice for a predominantly young, female-skewing audience. That's nowhere more apparent than in Hollywood, which has rushed to sign the "Insta-famous" (The Fat Jew has landed at CAA and recently appeared in the Zoolander sequel) and writes Instagram promotion requirements into actors' movie deals. In a media landscape where pictures of Taylor Swift's Fourth of July party become international news and Beyonce responds to the police shootings of two black men with a heartfelt post, Instagram has gone mainstream.

But despite the success, pictures, in the media ecosystem, have about as much value as words — which is to say, not much. Today, The Graduate's Benjamin Braddock would be told the future in one word is "video." And Instagram now finds itself in an arms race to win — competing not only against other social platforms but also against all media chasing a piece of the $17 billion in advertising that eMarketer expects to flood the digital video market by 2020.

"It's a huge opportunity," says Cowen and Co.INTERNET analyst John Blackledge, who notes that social and video platforms will be on the receiving end as marketers shift their $200 billion in global television ad spend to digital. "The train has left the station. There's going to be a long-term shift over to digital."

This is where such celebrities as Gomez and Hart come into play. Instagram credits them, and others socially savvy enough to have a top account, with fueling its recent video boom by posting more than twice the number of videos each day as they did in 2015. When Instagram expanded its video length this year from 15 seconds to 60 seconds, the singer and the comedian each had 60-second clips at the ready: Gomez in the studio working on a new song, Hart on a safari during a comedy tour stop in South Africa. "I was so stoked when Kevin [Systrom] told me they were doing 60 seconds," says Gomez, who in March became the most followed person on the app (89 million). "I feel like you're really allowed to share what your life is, and I found that people respond really well to organic, fun videos."

No one understands how important video has become to Instagram better than its 32-year-old co-founder and CEO. "We're watching this space very closely," says Systrom from across a marble conference table at Instagram's Menlo Park, Calif., offices in May. Later, during the course of his interview, he searches for a way to sum up the position that Instagram — and Facebook and Twitter — are in and finally comes up with the words: "What we're trying to figure out — and, I think, what every other company is trying to figure out — is we're all drilling for oil in this big field of video. And it's like, where are you going to hit it? What's the next, biggest opportunity?"

Instagram, which sits ensconced in a small corner of Facebook's sprawling headquarters on the aptly named Hacker Way, is an easy hourlong flight from the Hollywood community that has become infatuated with its app. But it feels a world away. It's only once inside the bland-looking corporate office park that Instagram's neon pink new logo becomes visible, plastered against a wall to commemorate its May rebrand. Lining the office are posters that proclaim, "Keep Doing."

Systrom, eager to hear how users have responded to the recent video push, has assembled three of his product managers on plush couches and chairs in the conference room that serves as his de facto office. Video, he explains to his team, "is probably the most important area" for the company this year. With people watching 150 percent more video on the app than they were just six months ago, Instagram has released updates meant to stoke the creation and consumption of this content (and, yes, to monetize it more effectively via ads, which are embedded in people's feeds like any post). In February, the company added view counters to showcase just how many people are watching clips, and it has begun giving videos top billing under the "Explore" tab, where it highlights popular and selected-for-you posts.

Selena Gomez

Instagram is making the bold bet that the millionsOF CELEBRITIES, photographers, famous pets and regular Joes who post photos on the app are clamoring for more video, too. That's hardly a sure thing, but initial reaction is encouraging. "A lot of the longer videos are seeing really high engagement," says a product manager, dressed in Silicon Valley standard blue jeans.

Hart is among the celebrities who have taken to the format. On July 7, he posted a clip responding to the recent police shootings. He uses the service for less serious messages, too. By expanding the limit to 60 seconds, "your Instagram becomes a movie trailer, movie teaser or movie promotion platform, and it also becomes your own promotional platform," he says.

But for all the early momentum, there are hurdles. Digital marketers and social media managers say Instagram videos can drive less engagement overall than photos, something even the prioritization of views over likes doesn't completely shield. "The fact that they're showing us views now gives us a sense of, 'Yeah, they might not be liking it, but they're watching it.' That's the engagement that we want, ultimately," says Luigi Picarazzi, who runs social media agency Digital Media Management and counts Nicole Kidman and Elizabeth Banks as clients. "But I do think Instagram's going to need to find what type of video works on the platform. Fifteen-second videos are still the preferred length and what users ultimately want to see on the platform because it's not one we've established a longform relationship with."

As if to further highlight just how important video will be for Instagram, reports surfaced in June that the app, much like Facebook, has experienced a decline in sharing, meaning people are posting less on average. Systrom's response: "We are not slowing down with growth." Still, it's a challenge that appears tied to the fact that people increasingly are drawn to the raw, unfiltered moments they find on platforms like Snapchat and Twitter-owned Periscope, where the experience is live or semi-live. There isn't as natural an interaction on Instagram, where beautiful, carefully selected images generally are rewarded with more likes, says Jeremy Liew, an early Snapchat investor viaLIGHTSPEED Venture Partners. "That creates a lot of performance anxiety. It's gotta be good," he says. "So the ratio of people posting on Instagram is going to be dramatically lower than it is on something like Snapchat, where there's no such thing as bad Snap or a good Snap."

In addition, Snapchat appeared to go after Instagram and Facebook directly July 6, when it unveiled a new product, Memories, for saving and reposting old photos. "There are always going to be more companies," counters Systrom, who then takes a veiled swipe at the competition: "If you want to take a simple photo that you don't really want to remember and post it to have your friends not see it after, there are great networks for that."

But it's not a zero sum game, says Matt Cohler, an early Instagram investor through venture capital firm Benchmark, which also was an early Snapchat investor. Video, he adds, "is a huge movement, and it's positive for everybody that the companies that really matter start to figure this out."