Thursday, July 2, 2015., Facebook announced on Wednesday that it will be sharing ad revenue with its video creators, thereby it makes video publishers to publish their videos directly onto its platform. If successful, the effort will make Facebook a more serious threat to Google’s YouTube in online video.
Dan Rose, Facebook’s VP of partnerships said, “We’ve heard consistently from media companies and other video creators that if they were able to make money from their videos, they would publish more. We hear they get a lot of value from the distribution and promotion of their videos on Facebook… and we think this product will amplify that.”
Facebook’s video ads work a little differently from YouTube’s. Since pre-roll ads that auto-play in the News Feed would be a huge turnoff for users, the company is instead slipping commercials between video clips and banking on the fact that you’ll watch a string of videos in one sitting. Unlike the auto-play ads that populate the News Feed, these ads will play sound automatically.
That means that at the end of each clip, a “suggested videos” screen will pop up with other videos that Facebook’s algorithms decided you might like. After every few, an ad will appear, and 55% of the money earned will be allotted to the publishers of the videos that came before and after, depending on how much of each was watched. Facebook takes the remaining 45% cut.
The initiative is aimed at smartphones, source of 75% of video views on Facebook, the company says. RBC Capital Markets analyst Mark Mahaney said “YouTube shows a similar number of videos, but only about 50% of its video views come from phones.”
Under the new program, mobile users who view a video in their news feed will then be directed to videos that Facebook thinks they might be interested in. Video ads will be interspersed among these videos, much like TV commercials. Initial media partners include the National Basketball Association, Hearst Corp., Fox Sports, Funny or Die and Tastemade.
“There are use cases when someone wants to go into a video consumption experience,” said Dan Rose, Facebook vice president of partnerships. “Scrolling through your news feed is not the most efficient way of doing that.”
Another big draw for advertisers is that the sound for their ads will be switched on by default, a welcome shift for those who have bemoaned the fact that auto-play ads on Facebook have been muted until now.
Buying video ads without sound is “wasted money,” said Bob Rupczynski, vice president of media, data and customer-relationship management at Kraft Foods.
Mr. Rose said Facebook was taking piracy issues seriously and plans additional moves to address piracy this summer.
During the first few months, Facebook won’t charge advertisers for ads shown, so there won’t be any revenue to share. Mr. Rose said Facebook will watch how users react to the feed and later set up a way to package and price the ads.
