The online battle for TV ad dollars continues to heat up. Yahoo, AOL, YouTube among others, and now Facebook are all aiming their sites on the burgeoning online video ad market and a share of TV’s outsized ad budgets. As first reported in December, Facebook has been shopping new video ad units to agencies.
Now, it appears Facebook will be bringing video ads to users’ newsfeeds in July, according to The Financial Times.
The video ads will appear in newsfeeds on desktop computers as well tablets and smartphones and will be set to autoplay on mute. If a user clicks on a video ad, it will restart with sound. Facebook is reportedly seeking CPMs in the “low $20s”, a bit lower than the average $29 CPM of broadcast television according to MagnaGlobal.
Among the concerns from analysts and others are how users will react to having yet another form of advertising in their newsfeeds, as well as how the load time of video will affect user experience on mobile devices.
Performance on mobile is of particular concern for Facebook as it works to allay investor worries that it has not moved quickly enough to monetize mobile traffic. The company showed a 54% increase year-over-year in mobile users in its Q1 2013 earnings, and mobile advertising accounted for roughly 30% of advertising revenue during the quarter. Yet, the company’s stock price has been hovering under $30 since February.
According to people familiar with the plans, the new online video ads could yield up to $1.5 million in new revenue per day based on initial inventory levels. Big brands including Ford, Coca Cola and American Express are expected to participate in the early trials.
It is unclear if Facebook is also approaching TV broadcasters and film studios to advertise their shows and films with the new ads, but based on recent studies, it would seem the social TV angle would be a sensible pitch.
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