Face­book pushes ahead with video am­bi­tions

Jamaica Gleaner - - BUSINESS - – AP

FACE­BOOK’S LAT­EST strat­egy is to grow both user-gen­er­ated and ad­ver­tiser-cre­ated videos as it tries to get a firm foothold in this nascent but grow­ing mar­ket.

The strat­egy ap­pears to be work­ing. While Madi­son Av­enue is not known for risky ex­per­i­ment­ing, ad­ver­tis­ers are al­ready test­ing the wa­ters with live video. Gen­eral Mo­tors, for ex­am­ple, launched its elec­tric Chevy Bolt EV through Face­book Live this year.

It helps that Face­book had suc­cess­fully tran­si­tioned from desk­top to mo­bile, de­spite early doubts. Now, when Face­book tries to sell video to its ad­ver­tis­ers, it can sim­ply point to past fi­nan­cial re­sults. The per­cent­age of ad rev­enue that came from mo­bile has in­creased ev­ery quar­ter since the com­pany be­gan re­port­ing this fig­ure in 2012.

On Wed­nes­day, the com­pany re­ported third-quar­ter earn­ings of $2.37 bil­lion. The so­cial me­dia com­pany posted rev­enue of $7.01 bil­lion in the pe­riod end­ing Septem­ber.

In the April-June quar­ter, Face­book had $6.24 bil­lion in ad­ver­tis­ing rev­enue, a 63 per cent in­crease from a year ear­lier. Mo­bile ad­ver­tis­ing ac­counted for 84 per cent of this. Face­book had 1.71 bil­lion monthly users as of June 30, up 15 per cent from a year ear­lier.

Video is the next chal­lenge. Where Twit­ter failed with the quirky, killed-off video app Vine, Face­book is suc­ceed­ing with In­sta­gram, not to men­tion its main ser­vice. Users are post­ing and watch­ing live and recorded videos, thanks to more pow­er­ful smart­phones and a re­lent­less prod­ding by Face­book to do so.

If you use Face­book, for ex­am­ple, you likely re­ceived no­ti­fi­ca­tions that your friend “is live now” or “was live” — that is, broad­cast­ing live video from wher­ever they hap­pen to be, do­ing what­ever they hap­pen to be do­ing.

GROW­ING REV­ENUE

While Face­book does not break out how much money it makes from video ad­ver­tise­ments, the com­pany needs them to keep grow­ing rev­enue at the im­pres­sive rates it has since go­ing pub­lic in 2012. Video ads make up a small but grow­ing slice of the over­all dig­i­tal ad mar­ket. Re­search firm eMar­keter ex­pects US mo­bile video ad spend­ing to hit $7.1 bil­lion in 2018, up from $4.5 bil­lion this year. That’s about 10 per cent of the over­all money spent on mo­bile ad­ver­tise­ments.

Live and pre­re­corded videos are just one ex­am­ple of the new ways Face­book is find­ing to show you ads. Down the road, ex­pect ads on the mes­sag­ing ser­vice What­sApp, or on Ocu­lus Rift, its vir­tual re­al­ity head­set. If you are one of the one bil­lion peo­ple who use Face­book Mes­sen­ger, you are likely see­ing the pre­cur­sor of ads in the ser­vice, in the form of busi­nesses mes­sag­ing you with au­to­mated “chat­bots.”

Face­book is the world’s No. 2 dig­i­tal ad pub­lisher be­hind Google. An­other tid­bit: eMar­keter es­ti­mates that each Face­book user, on av­er­age, will gen­er­ate an es­ti­mated $15.83 for the com­pany this year.

There have been some hur­dles. In Septem­ber, Face­book dis­closed that it over­stated the av­er­age length of time users watched video ads on its site. The mea­sure­ment did not af­fect how much Face­book charges to run video spots, but an­a­lysts say ad agen­cies may have used the Face­book es­ti­mates as a key met­ric when they plan cam­paigns and de­cide how much ad­ver­tis­ing to place on Face­book or com­pet­ing sites.

Face­book CEO Mark Zucker­berg

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