1. Facebook’s New
Video Ads
Marta Mattioli,
Ruth Corrigan,
Eridani Baker
8th
May, 2013
Background
As online video advertising grows on
a global scale, many platforms are
looking to capitalize on this
opportunity and to capture some
share of TV advertising revenue.
Among these platforms, Facebook is
looking to launch a new video ad
format later on this summer.
Details
There has been no official
announcement as yet, but it is
rumored that the video ads will
appear in the newsfeed and auto-play without sound. It will then be possible to activate the audio
and the video will restart from the beginning. Each video will last a maximum of 15 seconds,
suggesting Facebook has taken note of Vine’s offering – which is limited to a 6 second video
format.
A small number of big brands will be part of the initial trials, including Unilever, Nestlé, Ford,
Diageo, American Express and Coca Cola. To create more impact (at least at the beginning) users
will only see video content from one of these advertiser’s in any one day. The ads will be bought on
a cost per thousand basis with rates predicted to be in the low $20s, a cost per engagement model
is not currently being considered.
Implications
Facebook has up to 70 different ad types already, so what will make this new format stand out from
the rest? It allows Facebook to tap into the rapidly expanding online video advertising market - 41%
growth Y.O.Y, US 2012. The new ads are expected to generate up to US $1.5m new daily revenue
and up to $4m per day by the end of the year.
Some brands, such as Unilever and Volvo have already conducted research into how TV and social
video can link together to drive lifts in brand awareness and ad recall. Facebook’s new video format
will offer a new source of consumer data for advertisers that can feed into such research.
The customary consumer uproar that accompanies the launch of ad products on social platforms
will undoubtedly ensue; the auto-play feature is likely to be the most talked-about change. There is
also the possibility that users could learn to ignore the ads as they will be easily identifiable as ads.
This problem could be avoided if Facebook make the ads work in the same way as sponsored
stories, as users are more likely to watch a video which has been validated by their friends first.
Summary
Consumers naturally share video on Facebook, so the introduction of video ads in the newsfeed
seems to be a natural addition to the social giant’s large bank of ad formats. There is no mention
of whether this video format will extend beyond desktop, but with large volumes of people now
watching video on their mobile and Facebook beginning to prove its revenue potential through the
channel (30% of its revenue in Q1 this year was on mobile), it is likely to be in the plan.