Facebook will start video advertising in July. These video ads will appear in the newsfeeds of users, automatically playing but without sound, giving that option with sound to the users if they want to. With this move, Facebook hopes that this will ultimately lead to an increase in share price compared to last year’s dreary listing in the stock market.
TV advertising has a total market of 64.5 billion dollars in the United States. Only a small percentage of that goes to digital video advertising, but the former is getting some momentum as it is expected to reach 4.1 billion dollars in 2013, a 41.4 percent increase compared to last year’s value.
As it turns out, this move by Facebook displays how it wants to stimulate growth by participating in video ads, where much of advertising is spent. The same can be said about AOL and Yahoo, and other digital media firms that have also made similar online video ad proposals.
Among the companies that are expected to be Facebook’s early clients for video advertising are the following global brands: Coca Cola, American Expres, Diageo, Ford, Nestlé and Unilever.
Effects of Video Ads on Facebook User Experience
According to Brian Wieser, a Pivotal Research analyst, video advertisements have the tendency to be annoying to a Facebook user’s news feed, only if that video will automatically play, or autoplay for short.
If the autoplay feature is not present, then video ads would only bring about just as much intrusion as the now common “static” ads that are found in the social networking site. Wieser said that “autoplay would generally be disliked, but Facebook will be doing some testing to assess what the cost is in terms of turning people away.”
Facebook Video Ads Rate
According to sources acquainted with the video advertising plans of Facebook, advertisers will be charged in the low twenty dollars for every one thousand views, whether the audio has been turned on or not.
MagnaGlobal points out that this pricing is less than the per thousand individual views rate for broadcast tv commercials, at 29 dollars on average. Facebook users will firstly see video ads from a single advertiser in a single day. The maximum duration of each advertisement is 15 seconds.
Projections for Facebook Video Ad Revenues
According to sources familiar with the plans, Facebook video ads are expected to bring home a daily revenue of 1.5 million dollars during its first few months. Scott Devitt, a Morgan Stanley analyst, projected that as much as 4 million dollars per day can be obtained through these video ads by the end of 2013. This growth is faster than that of mobile ads during its first six months.