CEO Mark Zuckerberg
Bloomberg reports that Facebook will sell 15 second long television-style ads, that will appear on its site, for as much as $2.5 million a day. By comparison, 30-second ads on the Super Bowl tend to go for $3.5 million.
Fifteen seconds is the same length as an Instagram video.
The video ad feature a big bet for Facebook. Apple, for instance, once attempted to charge $1 million for an ad in its iAd mobile system but was forced to gradually draw down the price when clients balked.
Facebook is attempting to capture the advertising dollars that marketers often allocate to television spending. In fact, as early as last October, COO Sheryl Sandberg told investors during an earnings call that advertising on Facebook was superior to doing so on TV.
Advertisers spent up to f $3.8 million on a 30-second television commercial during the Super Bowl in 2013. And 108.4 million people tuned in to watch the big game.
Facebook, on the other hand, has the attention of 1.15 billion users. "And it happens every day," Sandberg said.
"The commercials will initially be sold on a full-day basis and can only be targeted to users based on age and gender, according to the people. Facebook members won’t see a spot more than three times in a given day, the people said. Depending on how large an audience an advertiser plans to reach, the ads will range in price from $1 million to about $2.5 million a day, according to [Bloomberg's sources]."
Rumors of the video ad have been circulating since last year. In December, Ad Age reported that executives expected the spots, which would supposedly run on "autoplay," to appear "by April at the latest."
CEO Mark Zuckerberg did not discuss the ads during Facebook's Q2 earnings call last week. Sandberg specifically said she had no news to report on that issue, also.
Sandberg did note during the conference call, however, " Every night, 88 million to 100 million people are actively using Facebook during prime-time TV hours in the United States alone.”
Sources previously told Business Insider that Facebook has already been reaching out to ad agencies about the product.
"I've talked to some sources who have been pitched directly from Facebook at agencies," Rob Jewell, CEO of Spruce Media, told BI. "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."
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