Facebook updates fuel video ambitions
Some see opening for Watch to attract advertising dollars as News Feed shifts focus
Facebook made waves in the media industry with its recent announcement that it would put a new focus on “meaningful social interactions” with close friends and family in its News Feed — the column that people scroll through when they open the site — instead of content from publishers and brands.
The company, which together with Google dominates the online advertising industry, has emphasized to ad agencies that the shift will mostly affect the visibility of publishers that have been able to reach readers for free through News Feed’s automated placement of their posts. It won’t, the company said, affect the sponsored posts that businesses pay to show people as they scroll.
But several advertising executives have speculated that the new rules could ultimately fuel the social network’s long-held video ambitions.
As advertisers examine the details that Facebook has shared so far, such as reducing videos from publishers and giving priority to content that can “spark conversation,” some see an opening for the nascent Facebook Watch video section and its live videos. And, of course, for the ad dollars that accompany such content.
“Facebook has been studying TV for a few years now, and they see there is a certain equation to the size and success of TV,” said Ben Winkler, chief investment officer of the agency OMD. “It’s three elements: a highquality user experience, prominent high-quality video and a curated, restricted supply of said video. What that equation results in is higher rates and stable, consistent ad dollars and growth — and Facebook is looking for ad growth.”
While Facebook said that it wanted people to spend less time “passively” viewing content, including videos, it also extolled the robust discussions that often accompany live video streams. And last week it said it was testing a product, called Watch Party, that will allow groups to watch nonlive videos together.
More generally, video content is “among the most shared and commented-upon content on the web,” said Winkler, who expects videos will be given priority over text posts.
Facebook is changing its site after a year in which the company came under governmental scrutiny for its role in spreading misinformation and hate speech. Separately, the company said Friday that it would highlight high-quality news on the site by allowing people to rank news sources that they saw as the most credible and trustworthy.
“There is a recognition that Facebook has been, for lack of a better word, toxic,” said Brian Wieser, an analyst at Pivotal Research. “If they have ideas around what the solution to that problem is, and it happens to clear the field for Facebook-owned and -operated content, that’s a happy coincidence.”
Facebook makes most of its money from online ads — posting a net profit of $10.2 billion (U.S.) in 2016 — and has made it clear that it believes its future lies in video and video ads. Wall Street analysts regularly ask the company about its progress in attracting the hefty ad budgets that remain locked up in television despite cord cutting and the emergence of streaming platforms.
Still, Facebook’s video tab, Watch, which was introduced in August, has been met with some skepticism.
“One of the things that Facebook has done here that it hasn’t necessarily done so much in the past is they let the ad model lead the consumer behaviour versus the other way around,” said Sarah Hofstetter, chief executive of the agency 360i. “Watch was built with the premise that ad dollars were coming to video and it would be smart for Facebook to have a video platform.”
Hofstetter noted that Watch could potentially benefit if publishers that had relied heavily on Facebook traffic started making fewer videos now. “This, in turn,” she said, “could lead to less inventory and push advertisers towards the more premium videos within Facebook Watch.”
Publishers could also respond by migrating videos to Watch, where Facebook could sell more of the preroll ads that run before YouTube videos, said Ben Hovaness, executive director of digital activation at Omnicom’s Hearts & Science agency.
“You can think of the Watch tab as Facebook trying to have its own YouTube inside of it,” he added.