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Facebook rolls out video ads, takes aim at TV Networks

Matt Kapko | March 17, 2014
After months of testing, Facebook launched its premium video ad product yesterday. The opportunity for a massive windfall in new revenue helps explain why Facebook was so deliberate in testing the efficiency and reaction to the ads.

Facebook finally launched its video ad product yesterday in its quest to bring more TV ad dollars into the social graph. After numerous delays, Facebook appears confident that the new auto-play video ads won't disrupt users' flow on their news feeds.

As TV advertising budgets move online, Facebook stands to be a major beneficiary of that shift. That undeniable opportunity for a massive windfall in new revenue helps explain why Facebook was so cautious and deliberate in testing the efficiency and reaction to the ads prior to a wider rollout.

Facebook says its working with a select group of advertisers for now and that users will begin seeing the ads in their news feed on mobile and desktop over the coming months.

Facebook Keeps Ads on Mute
The 15-second video ads will automatically play without sound as they appear on the screen and stop once a user scrolls past them. The ad unit also includes a full-screen view with sound that users can access by clicking on the ad.

Defaulting to a muted auto-play video ad follows the same advertising approach taken by Instagram and Facebook hopes it's enough to not turn off too many users in the process. Facebook officially began testing the premium video ads in December.

In a pitch deck that Facebook presented to large advertisers at the time, it highlighted data that showed Facebook reaching a higher percentage of 18 to 24 year olds in the U.S. than each of the four major TV networks. With an average reach of 70 percent during primetime viewing hours, Facebook beats the scale of those networks by at least 9 percent or as much as 15 percent, according to the widely leaked presentation.

Facebook also claims to have a greater reach than TV networks among 25 to 34 year olds by as much as 160 percent during daytime hours and up to 38 percent during primetime.

"It's just all about the reach and being able to give them really good insight into who they're reaching," says Seth Shafer, research analyst at SNL Kagan. Facebook's average daily and monthly audience numbers are large enough to get the attention of any advertiser, but the company's ability to also target and segment those audiences is what sets it apart, Shafer adds.

Hey, I Saw That on TV
Indeed, much of Facebook's playbook for video ads follows the same framework that advertisers are already accustomed to on television. It's primarily those TV ad dollars, an industry that approached $70 billion in the U.S. last year and almost $200 billion globally, that Facebook has in its sights.

TV networks are "already eager to place big investments around their fall season," but the film industry has been less enthusiastic, David Lawenda, head of Facebook's global marketing solutions, said last month at the Digital Entertainment World conference.

 

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