Ahead of its official release on Friday, Amazon (NASDAQ:AMZN) premiered the first episode of its newest original series, Catastrophe, on Facebook (NASDAQ:FB). The social network's video feature has grown in popularity since the company made video play automatically in users' news feeds and tweaked its algorithm to display more videos. Last quarter, Facebook says users viewed an average of 4 billion videos per day.
Those numbers make it a compelling alternative to Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube as a video distribution platform. It's especially true if the company is more interested in building awareness -- as is the case with Amazon's Catastrophe -- than monetizing its audience.
If you want to be seen
YouTube built its business on top of the idea that anyone can upload a video and get discovered. Justin Bieber famously got his start there, and it's been the launching pad for dozens of other celebrities. However, with the growing number of videos uploaded to the platform every day -- now up to 300 hours of video per minute -- it's become increasingly difficult to stand out on that platform alone.
For someone looking to maximize exposure, Facebook's native video platform may provide a better option. Amazon certainly seems to think so.
A recent study from Socialbakers published by Business Insider found that native Facebook videos receive more shares and interactions from users than non-native videos like those posted from YouTube. That means Amazon stands to reach a wider audience by uploading its video directly to Facebook instead of putting it up on YouTube and simply sharing it on Facebook.
For Amazon, getting in front of as many people as possible is paramount to its efforts with the Catastrophe pilot. It typically previews a wide selection of pilots for free on its homepage, which generates buzz about its Prime service and increases sign ups. But since Catastrophe, which originally aired in the UK on Channel 4, was purchased outside of its typical pilot selection process, Amazon needs to generate buzz some other way. When it comes to free organic promotion, Facebook's social network is unmatched.
Translating into paid promotion
Amazon's decision to promote Catastrophe through Facebook points to the great potential Facebook has with promoted videos. Although Amazon isn't paying to promote Catastrophe on Facebook, many other companies produce videos that they do pay to promote -- often called commercials.
YouTube currently commands a huge amount of ad spend from companies promoting their videos and products on its platform. Last year, the platform brought in $4 billion in advertising revenue. Most of those advertisements came in the form of preroll video ads that operate similarly to television commercials.
With Facebook, advertisers may need to take a different approach, promoting videos that don't directly try to sell to viewers, but instead prompt them to share the video. That's where Amazon has succeeded with its decision to put the Catastrophe pilot on Facebook. It's interesting content that indirectly promotes Amazon's real product -- an Amazon Prime subscription.
We could see Facebook strike deals with more media companies going forward, especially with the growth in over-the-top video services. Broadcasters may promote videos of behind the scenes footage or outtakes from upcoming episodes or live events.
More ad dollars means higher ad prices
Facebook's management made it clear on the company's most recent conference call that the increase in video views on its platform doesn't directly translate into higher average ad prices. A promoted video simply takes the place of another kind of promoted post on Facebook. Advertisers don't necessarily pay more for video ads versus another kind of advertisement.
However, video ads are often worth more to advertisers, which means they're likely to bid more for placement over static posts. Increasing the amount of video ad spending on Facebook will naturally increase the average ad price for the company.
Not that Facebook has had any trouble increasing ad prices lately. Last quarter, its average price per ad increased 285% year over year. The growth of video on Facebook is just icing on the cake.
Adam Levy owns shares of Amazon.com and Apple. The Motley Fool recommends Amazon.com, Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.