Can Faceook challenge Youtube in video arena?

The ‘social network’ looks to dethrone Google with new ad system, IQ research. Will it work?

It’s official: Facebook has declared war on YouTube, aiming its guns firmly at advertising’s fastest-growing segment: digital video.

Google’s YouTube is part of the furniture of the internet and, for many, it simply is online video. Its shadow over the digital ad market looms large, commanding a 31.8 per cent share of the market, data from eMarketer suggests. By comparison, Facebook snatches just a 5.8 per cent share.

According to eMarketer, YouTube is on track to generate $7.2 billion from global advertising in 2014. However, its switch towards quality content to attract more advertising has come at a price. Traffic and content acquisition costs are believed to result in net ad revenues closer to $3.2 billion – around half of the total ad-spend directed at Facebook ($7.87 billion).

The battle will play out on two fronts. First, Facebook has a new way to serve ads, Atlas, that uses its data to run non-Facebook campaigns Omnicom has already transferred its buying systems to Atlas.

Second, Facebook believes it truly understands mill-ennial attitudes through its IQ research, and this means video. The recent acquisition of the video ad network LiveRail will presumably give the social giant the ability to serve video ads through Atlas. Meanwhile, Google’s new video ad format weaves its famous algorithm into YouTube to make sales more robust and reliable. In the US, Google Preferred has run since April, and fourth-quarter ad bookings are reported to have already sold out. Google Preferred launched in the UK last week. However, in terms of user numbers, comScore’s recent US figures showed Facebook coming in ahead of YouTube by one million views.

Add to the mix new analysis from Socialbakers that found Facebook is closing the gap on YouTube as a video distributor. Drawing on more than 180,000 Facebook video posts across 20,000 pages, Socialbakers forecasts Facebook will surpass YouTube in terms of share of video interactions for the first time by the end of the year.

With online video tipped to remain the fastest-growing part of the ad market in the next few years, there is much to play for.