The widespread popularity of Facebook makes it very attractive as an advertising platform, and now video is entering the ring. Facebook rolled out a video advertising program in September that places video ads into users’ newsfeeds as part of their native social media experience.
The videos will automatically catch a user’s attention as they browse through their newsfeed, but they will not have any sound. Although the ads are only visible to a small group of users for now, the social media giant is hoping to make it more widespread eventually – especially on mobile devices. While initially Facebook was slow to cater to mobile audiences, today more than 50% of total advertising revenue comes from its mobile advertising programs. The success in mobile advertising helped to push its stock price up 100 percent over the last year.
Another opportunity for ad revenue. Video advertising offers another major opportunity for advertising revenue. Their desire to add video opportunities into their advertising mix is being driven by overall industry trends. According to emarketer, digital video advertising spending was expected to reach $4.15 billion by the end of 2013, which would be a 23 percent increase from 2012’s figures. YouTube reigns supreme in this market, with 20% of the total spending in digital video advertising.
Facebook could be poised to have a much larger piece of the digital video advertising pie. Sterne Agee, a research firm, predicts that the social networking company could earn as much as $3 million per day in video ads. This would represent as much as 10 percent of the company’s total advertising revenue in 2014.
Not a sure thing. However, this all depends on how to advertising is received. While the efforts to monetize and add advertising to the Facebook wall has gone over well for audiences, video is something different entirely. It might feel more intrusive to the audience, and they may end up opting out of the experience – leaving advertisers with very little to show for their investment.
Facebook is hoping that if users don’t necessarily want to watch the entire video, they will at least tolerate them and stay opted into the video advertising experience.
So far the feedback has been less than encouraging with users complaining about the slow loading times and irritating experience. “If it irritates me as much as I expect it will, I will be using FB a lot less,” stated one user, Brigette Meskey. But analysts in the industry doubt that video advertising will create a mass exodus of users.
Taking steps to reduce the annoyance factor. Facebook is trying to reduce the annoyance by taking steps to ensure that the video ads remain catchy and inviting. In addition to being silent as they load, videos will also be downloaded while devices are connected to WiFi – and not use any data bandwidth. This means that if ads are viewed by a device on a cellular network, the device will show pre-downloaded versions of the video ads so that there isn’t too much data consumption. After the video advertisement is viewed, users will have the option to view two more additional video ads.
The advertising program will start with video ads for “Divergent,” a sci-fi thriller film from Summit Entertainment. Eventually the video advertising program will be introduced to a broader audience. Facebook reports that they’ve seen views, likes, shares and comments increase more than 10 percent in initial testing.
According to analysts, their initial tests should be a starting point that they move out from slowly, and use additional trials before introducing the program on a widespread basis. Although Facebook has made multiple changes to its format as well as its privacy settings, most changes have been met with a bit of an uproar from the community. As long as it can balance the needs of the advertisers with the needs of the audience, the video advertising program may bring in the expected revenue and change the face of Facebook yet again.