Facebook Q2: Zuckerberg Delays $1 Million Video Ads That Will Kill TV

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Facebook CEO Mark Zuckerberg.

The big question we're hoping Facebook CEO Mark Zuckerberg will answer on his Q2 earnings call is this: When will Facebook fire its broadside at the TV business by finally rolling out the first of its long-planned, not-yet-seen, $1 million video ads?

Our sources tell us that Facebook sales teams are pitching the ad units to big media buying agencies, and have gotten enthusiastic responses. It will happen, we're told.

That means video ads on Facebook are coming to your news feed; news of them first leaked in April. In an amazing coincidence, the ads will reportedly be 15 seconds long — the same length as an Instagram video (which Facebook also owns).

They might not arrive anytime soon, however.

"I've talked to some sources who have been pitched directly from Facebook at agencies," says Rob Jewell, CEO of Spruce Media, whose Facebook ad buying clients include Procter & Gamble, Samsung and University of Phoenix. "Agencies also seem really excited about it. I think it's because the problem with online video buying today is that there's really no reach. You can't get that TV-like reach online, and I think that's what has held up those TV dollars from going online. You have to piece it together from lots of video sites with 5 or 10 million users here and there. The size [of Facebook]  is appealing to agencies."

Counterintuitively, the steep price of the ad unit is precisely what agencies like about it. You can run a big campaign on Facebook for a few thousand dollars, but that's chump change to TV media buyers. They prefer to deal with billions annually. Needle-moving budgets, in other words.

Facebook has repeatedly described its audience size as the equivalent to three Super Bowls happening every day (roughly 300 million people per day). Obviously, the first advertiser into the new format will be a big one, Jewell says: "One of the biggest agencies with one of the largest media buying clients. I know they were very interested but all the plans got pushed back a quarter. I don't even know if it's going to be Q3. I think it might be Q4."

A second source tells us that Facebook video ads were "pulled" and now won't appear until 2014. A third executive suggested a similar timeline.

Facebook declined comment when reached by Business Insider.

The advent of mass video advertising on Facebook could be a huge threat to television. It's not just the size of Facebook's daily audience that's a threat, it's the analytics, too. Unlike TV,  a Facebook video ad will be able to tell advertisers who saw it, who clicked on it for more, what sales results it spurred, and more. It has partnered with a bunch of Big Data providers who will be able to tell clients exactly how well, or poorly, their ads performed.

TV advertisers, by contrast, mostly just guess at how effective their advertising is.

This is Facebook's big bet, and it ought to terrify broadcast and cable TV sellers: If Facebook offers audiences that are larger than network TV, and with superior ROI analytics, then why would anyone continue spending on TV when they can just run the same ads on Facebook?

Disclosure: The author owns Facebook stock.



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