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Facebook Unveils Video Ads to Court TV’s Market

March 13, 2014

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Facebook Inc.’s stock surge underscores how the company’s prospects have improved following its rocky stock-market debut in May 2012. Photographer: David Paul Morris/Bloomberg

Facebook Inc. (FB:US) is releasing its long-awaited video-advertising product today, as the world’s largest social network moves to diversify its revenue by tapping into television-marketing budgets.

The 15-second spots, which Facebook began testing in December and delayed several times, will be offered to select U.S. ad partners starting today. The promotions will be rolled out into users’ news feeds in late April or early May. The Menlo Park, California-based company is also testing two new features that marketers can apply to its ads -- one for scheduling what times of day an ad appears, and another for setting a promotion’s reach and frequency, said Brian Boland, Facebook’s vice president of ads product marketing.

Facebook, which has said it won’t increase how often it shows ads to people, is bolstering its ad-product lineup as it seeks to charge more for higher-quality promotions. The company is going after the lucrative television-ad market, with marketers planning to spend almost 60 percent more on TV than on digital media this year, according to ZenithOptimedia, a research unit of Publicis Groupe SA. (PUBGY:US) Internet ads in the U.S. are projected to reach $43 billion, with TV advertising garnering $66.8 billion.

Shifting Approach

As it works to increase the quality of ads, Facebook is also changing its approach to rolling out products. While the company used to quickly introduce ad formats and hewed to a “move fast, break things” philosophy, it took its time with the video ads to avoid pushing out something that didn’t work or that disrupted the user experience, Boland said. Facebook also began streamlining its ad offerings last year, while making it easier to measure and manage them.

“In the past we’ve done more stuff to just ship things quickly and see what happens in the market,” Boland said. “Now, instead of just throwing something out there, we’re making sure that we’re getting it right first.”

The 15-second video ads are akin in length to a TV commercial and will be sold similar to how television ads are offered, with targeting limited to age and gender. The ads will range in price from $1 million to about $2.5 million a day, people familiar with the matter have said.

Facebook users won’t see one of the ads in their news feeds more than three times a day, said Tim Rathschmidt, a spokesman for Facebook, who declined to comment on pricing. The company has asked Ace Metrix Inc., a video-advertising evaluation company, to review the material for the ads to ensure they are high quality before they reach users.

Zuckerberg’s Role

The rollout of the video ads follows delays of at least three times over the past year, said people with knowledge of the matter, who asked not to be identified because the plans are confidential. Chief Executive Officer Mark Zuckerberg was heavily involved in the development, the people said.

Marketers, who still spend most of their ad budget on television, have been looking for ways to reach large audiences online. While Internet properties such as Yahoo Inc. and Google Inc. (GOOG:US)’s YouTube draw big crowds, people don’t show up on the sites in simultaneously large numbers the way they do for hit TV shows or live sporting events.

Facebook has about 1.2 billion members globally, guaranteeing advertisers a Super Bowl-sized audience every day, said David Cohen, chief media officer at media buying firm UM,

“When I’m launching a new movie, and I want to accumulate very quick reach, other than the Super Bowl, getting 100 million guaranteed views in a 24 hour period? That’s just tremendous,” he said.

Ad Features

Facebook said its new product to manage ad timing would let an advertiser such as a pizza maker schedule its promotion for afternoon and dinner hours, when they previously would have had to manually pause and restart the pitch. The feature for setting reach and frequency would enable a marketer to space out its campaign across several weeks, instead of inundating users with ads all at once.

Facebook has been working to build its credibility among large advertisers, consulting with an advertising council made up of some of the world’s largest brands and working with outside firms like Nielsen to measure the impact of its advertising.

“We’re becoming much more solution-oriented, rather than giving advertisers a bunch of products and saying hey, you figure it out,” Boland said.

The average Facebook reach for targeted campaigns is 92 percent accurate, Boland said. For example, Facebook knows it has 30.5 million daily active users in the U.S. who are women between the ages of 18 and 49.

If the video ads work, Facebook will prove it’s morphed from a fast-moving startup into a leading media platform, said Jordan Bitterman, chief strategy officer at media buying firm Mindshare.

“Decisions are now being made with both users and advertisers in mind,” he said. “That’s responsible behavior.”

To contact the reporters on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net; Sarah Rabil at srabil@bloomberg.net Reed Stevenson


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Companies Mentioned

  • FB
    (Facebook Inc)
    • $72.36 USD
    • -0.29
    • -0.4%
  • PUBGY
    (Publicis Groupe SA)
    • $17.92 USD
    • -0.19
    • -1.06%
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