Advertising revenue made up 96% of Facebook’s overall $7.1 billion in revenue in its most recent quarter. And the biggest growth in Facebook’s ad revenue these days is coming from mobile video ads.
Now Facebook (FB) will bring video publishers into the fold for a piece of the ad action.
Re/code reports that Facebook plans to test out mid-roll ads in native (not live) videos—that is, ads that play 20 seconds into a video, as opposed to pre-roll ads, which play before a video begins. Facebook will sell the ads itself (at first), and give video publishers 55% of the sales. As Re/code points out, the 55/45 split is the same deal YouTube offers.
This is huge news for content publishers of all kinds.
Up until now, there has been little monetary incentive for publishers to produce videos for Facebook, or even to cross-post their existing videos natively on Facebook, apart from the abstract “brand buzz” argument. They were not allowed to include pre-roll ads in their videos on Facebook.
In 2016, Facebook did begin allowing publishers to post sponsored videos, where an entire video has a corporate sponsor (a la this Vice story about a famous Buffalo Bills fan, “created by Bud Light and Vice Digital Services”) but not every publisher hopped aboard, and not every publisher does those kinds of videos. Selling a simple ad against a video is a far more common way for publishers to get money, and they’ve been long doing it on their own platforms.
But the vast majority of publishers run their ads as pre-roll, including Yahoo Finance. (If you watch the above video clip, from our daily Midday Movers show, a short ad plays before you see our panel.) By implementing mid-roll ads, Facebook is likely courting publishers that haven’t warmed to putting their videos on Facebook yet, and have stayed on YouTube, where they can sell pre-roll ads and get the revenue split. (Facebook’s plan ought to raise alarms for YouTube parent company Alphabet, among others.)
Facebook also may end up attracting new advertisers with this plan. Advertisers will be able to select the category of content that their ads run with, Marketing Land reports, but may not be allowed to pick and choose specific publishers or exclude certain publishers.
The pilot will show whether mid-roll ads work better in video content than pre-roll. Is a video viewer more turned off by an ad at the beginning of a video, or one that pops up in the middle? Facebook’s ads, Re/code reports, will only play after a viewer has watched 20 seconds, will be limited to 15 seconds in length, and will only go in videos of 90 seconds or longer.
The mid-roll ads might surprise viewers, especially at first, so it remains to be seen how receptive they are to completing a video once they’ve been interrupted.
Facebook said last year that 500 million users watch a video on Facebook every day, and that users on average view 100 million hours of video per day. Now it can monetize against those hours even more.
But expect the new ad sales plan to renew focus on Facebook’s own metric methods, which came under fire at the end of 2016, after the company repeatedly acknowledged giving ad partners inflated video-view data due to errors in its data reporting. The issues led the Association of National Advertisers to call for heightened auditing of Facebook’s metrics.
Facebook’s new plan to sell mid-roll ads will involve tracking and emphasizing the time spent on videos, which makes it even more urgent that Facebook fix its metrics.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.