Facebook mobile ads

Facebook isn’t just the world’s largest social network. In the past two years, it has also become one of the world’s most popular online destinations for consuming video content.

Last year, the company revealed that more than 500 million users watch video on Facebook daily, and that they collectively watch more than 100 million hours of video a day.

But despite its prowess for monetizing its service, Facebook has been slow to seek revenue from the massive video consumption its service generates. Unlike other popular video platforms like YouTube, outside of a handful of experiments, Facebook has not embraced pre or mid-roll video ads and it was just last year that the company finally permitted video creators to publish ad-free videos that contained paid product placement or which were created specifically for a brand.

According to a report by Recode’s Peter Kafka, however, Facebook is preparing to flip the switch on a mid-roll ad offering that video creators will be able to enable on the videos they publish on the social network, including those that appear in the News Feed.

Kafka’s sources say that the mid-roll ads will be eligible to play after 20 seconds, and will only appear on videos that are at least 90 seconds in length. Perhaps most importantly, Facebook will share 55% of the ad revenue generated with video creators, the same revenue share that YouTube currently offers video creators on its service.

A game-changer

Given Facebook’s massive audience, and the popularity of video content among that audience, the comprehensive launch of mid-roll ads could be a game-changer for Facebook’s ad business, video creators and advertisers alike.

For Facebook, which is facing peak ad load this year, mid-roll video could supply the next source of ad inventory the social network needs, and lead to potentially billions of dollars in new ad revenue.

For video creators, mid-roll ads (Read more...) make Facebook an even more attractive platform on which to publish video content. For advertisers, Facebook could quickly become one of the most attractive suppliers of highly-desirable video ad inventory.

But Facebook’s video ads could also be a game-changer for the industry at large. For example, as Facebook for the first time allows video creators to reap financial rewards through revenue sharing, it could have an impact on YouTube’s business, setting up a new and epic battle between Facebook and Google.

And Facebook’s mid-roll ads could dent the nascent business of one of its biggest upstart competitors, Snapchat. While advertisers have been flocking to Snapchat’s video ad product, last year, reports surfaced that advertisers are seeing sub-three second video ad views, raising questions about their efficacy.

If Facebook’s decision to focus on mid-roll ads that appear on videos of at least 90 seconds in length proves beneficial to the results advertiser see, it could force advertisers to rethink their spend on other platforms on which tangible results are more elusive.

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