With the largest social network in the world, Facebook (NASDAQ:FB) is a huge attraction for advertisers. Nowhere else can a company reach as many people as quickly and easily, but many brands feel that a lot of their ad "views" went mostly unseen by users.
The problem is that Facebook counts an ad view as soon as any part of the ad comes onto a user's screen. This month, Facebook added the option for advertisers to only pay for ad views after an ad has become 100% viewable.
At the same time, Facebook announced that it would offer third-party video ad analytics from Moat. These moves should help Facebook continue increasing its average ad prices going forward.
Visibility is everything for brands
Brand advertisers are the real companies demanding Facebook offer the option for 100% in-view ads. Direct-response campaigns often pay per click instead of impression, so if the ad goes unseen by users, it doesn't impact their total cost.
Brands, on the other hand, want their images or videos to be seen. Earlier this year, Facebook offered them the option to pay only for video ads after users watched 10 seconds after complaints that its autoplay video feature was causing video ads to go unseen despite Facebook's metrics. To that end, Facebook's partnership with Moat should provide more insight into how users are responding to video ads.
Facebook has already shifted from a served-impressions attribution to a viewed-impressions model. The former charges an advertiser as soon as its ad is served to the system, whether a user scrolls down far enough to see it or not. Last year, Google found that 56.1% of ads on the web go unseen. Comscore put that number at 54% in 2013.
Still, Facebook believes it creates value for advertisers as soon as an ad comes into view. And it has a point. Just seeing a brand name at the top of a post can have a branding effect on people who see it.
But advertisers want what they want, and some have held out from advertising on Facebook until it implemented a 100% in-view system. The influx of new big-budget advertisers into Facebook's system should help push ad prices higher.
Finding out what works
At the beginning of September, Facebook updated its Conversion Lift tools for advertisers. The new tools allows advertisers to measure brand and sales lift of an ad campaign not just against a control audience but against other ad campaigns.
That means advertisers will quickly be able to learn how much of an impact 100% in-view ads are having on its campaigns. This is a case, then, where Facebook is hoping it's wrong. If 100% in-view ads provide a significant lift to sales or brand awareness, advertisers will pay more for them. In that way, Facebook benefits from the increase of big-budget advertisers, and delivering higher value leading to even higher ad prices.
In partnering with Moat, Facebook is showing advertisers that it doesn't have to rely on its homegrown analytics tools. Moat will start with just video ads but will eventually extend to all News Feed ads. While Moat won't offer the full capabilities of Conversion Lift, big-budget advertisers are capable of putting together similar analytical results with the help of their own internal measurements. This removes any bias involved in Facebook's analytics, providing more assurance as to whether Facebook ads are working.
There's no doubt that these two moves will make advertisers happy. And if Facebook is as good at targeting advertising as all indications say it is, it should have a positive impact on its average ad prices going forward.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns and recommends Facebook. 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.