The Testing Is Over; Facebook Inc. Debuts Premium Video Ads

Earlier this week Twitter hired former YouTube executive Baljeet Singh as a product director of its revenue organization. One of his roles, unsurprisingly, is to help push new video ads, according to The Verge. As we wrap up the week, it's now clear that Facebook (NASDAQ: FB  ) is also getting ready to step up its game in video ads; the social network just announced that its test of "premium" video ads in the News Feed is no longer a test. Now, Facebook is introducing these ads to "a select group of advertisers."

How will Facebook video ads work?
Initially, Facebook was testing a series of videos from the upcoming film, Divergent. Similar to videos shared by other individuals, these premium 15-second video ads start playing without sound as they appear on the News Feed, and stop if you scroll past them. To hear sound from the video, users have to click on the video.

Divergent video advertising campaign. After a user finishes watching a premium advertising campaign video, a carousel featuring additional videos from the marketer will appear. Image source: Facebook's official For Business blog.

In its December press release announcing the testing stage, Facebook justified the potential for premium video ads eloquently.

Compelling sight, sound and motion are often integral components of great marketing campaigns, particularly when brands want to increase awareness and attention over a short period of time. From launching new products to shifting brand sentiment, this video format is ideal for marketers who are looking to make a large-scale impact, and for people who will discover more great content in their News Feeds.

These premium ads shouldn't be confused with Page video ads. Premium video ads' reach are "specifically designed for awareness campaigns that are meant to reach a large number of people to increase interest in a brand, product or content, in a short amount of time." Page post video ads, on the other hand, "can then come into play to sustain the message of this initial campaign over longer time periods, in more targeted ways."

As Facebook slowly rolls out the new ad product, premium video ads are limited to a few deep-pocketed marketers "with high-quality campaigns," so that Facebook can ensure the Facebook experience isn't hampered.

A lucrative market
Facebook's move to mass video ads was inevitable. Not only does it give the company a way to vie for TV marketers' budgets, but it also opens Facebook up even more to the fast-growing and lucrative digital video ad market.

There's no better example of just how much potential there is with online video ads than Google's YouTube. eMarketer estimates that YouTube raked in a whopping $5.6 billion in gross ad revenues for the company in 2013, with the bulk of that figure coming from video ads. Further, YouTube keeps a whopping 35% of these revenues, eMarketer says.

What about growth? eMarketer estimates that YouTube's gross ad revenues in 2013 were up 51% year over year.

While Facebook's year-over-year ad revenue growth in the fourth quarter of 76% is certainly impressive, growth rates like this are not sustainable over the long haul. With digital video advertising growing so robustly, and still in early stages of adoption, opening itself up to premium video ads could aid Facebook's growth story, while also strengthening its value proposition as a prominent advertising platform.

A stock that can make you rich
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 14, 2014, at 1:50 AM, sliderw wrote:

    Haven't they heard of data caps?!

  • Report this Comment On March 14, 2014, at 10:51 AM, TMFDanielSparks wrote:

    @sliderw,

    Fortunately they've designed it so that the only video ads that play on your carrier network are ones that were already downloaded via wi-fi. If none downloaded beforehand, none will play when you are using 3G/4G.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2875415, ~/Articles/ArticleHandler.aspx, 10/23/2014 5:53:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement