Facebook is playing a perpetual game of catch-up

Recently I penned an article on the dangers of investing in social networks based on some Pew research that brings into question whether Facebook (NASDAQ: FB) is actually losing its "cool factor." Now I read the news that it wants to become the newspaper of choice for mobile devices and I have to wonder if these guys aren't suffering from Twitter envy or something.

Bag it, hashtag it, sell it to the butcher in the store
Soon, Facebook users will be able to use hashtags and that's probably a good thing. As a Twitter user, hashtags are an easy way to search as well as see what's trending and I'm sure that Facebook users will find some value in it. But the real value, of course, will be for marketers as Facebook tries to figure out how to monetise its advertising platform. Still, until it rolls out, we have no way of knowing how effective or successful it will be. As it stands, Twitter is projected to bring in close to US$600 million in advertising revenue this year. Mobile will make up more than half of that and this trend will only grow over time.

Fifteen seconds is an eternity
Last Thursday, it was the big Instagram video announcement. Now Instagram users can make short video clips a la Vine (another Twitter property) except Instagram is different. While Vine is known for giving its 13 million users a shot at six seconds of glory, Instagram is going big. Fifteen seconds big. We make fun of it today, but as the mobile movement grows along with the competition for our eyeballs, 15 seconds may just seem like an eternity. And let's face it, given the fact that Instagram (a $1 billion acquisition) hasn't actually produced any cash for Facebook yet, it's a lock like Homer Simpson and floor pie that advertisers are going to be getting more than their share of those extra nine seconds.

Now it's news. Facebook I'm sure realises the value in the news as it's all around us at all hours of the day. And this is one area where Twitter has really played into its strength. Short posts, free-flowing information, it's simple and easy to follow whomever you choose, picture and video services that work seamlessly into the interface thanks to Twitpic and Vine. I'd say that Facebook certainly has its work cut out for itself.

Why this all matters
At the end of the day, this is all about the dollars. Shocking I know, but let's face it: We don't pay for a Facebook account — it's totally free. The company needs to make money somehow in order to justify what is arguably still an expensive-looking stock price today. Think about this: Google (NASDAQ: GOOG) is going to bring in about US$9 billion in mobile ad revenue this year. That's more than all the rest of its competitors (yep, Facebook, you, too) combined. For the second year in a row. And estimates are that Google's YouTube mobile ad sales tripled over the last six months, generating approximately US$350 million in sales. The stakes are huge and Zuck knows it.

Facebook is doing everything in its power to create a platform where users never have to leave. Graph Search, Home, Instagram, hashtags, the new Reader project — these are all efforts to create that platform. And it's probably the right move lest the connector of all things connectable go the way of something like MySpace. But the problem as I see it today is that Facebook is playing a game of catch-up with the likes of Google and Twitter, among others. It isn't innovating; it's reacting. And that's a problem. For users and investors.