News Column

Facebook Expands Video Ad Service

May 21, 2014

Reuters

Facebook is expanding its new video advertising service, allowing marketers to show the television-like spots to users of the social network in Britain, Brazil and five other countries.

The move marks a significant ramping up of one of Facebook's most closely watched new advertising products, which analysts believe could help the Internet company capture a bigger slice of lucrative brand advertising budgets.

The 15-second video ads appear in users' newsfeeds and play automatically with the sound muted until they are clicked on. Facebook began selling the ads in the US in March to a small group of marketers, including insurance company Progressive and television broadcaster NBC, a unit of Comcast.

Facebook said the performance of the initial group of video ads in the US has been strong, but declined to elaborate.

As it did in the US, Facebook is moving cautiously to roll out the auto-play video ads in its overseas markets to avoid annoying users. The company will initially work with a limited group of advertisers in France, Germany, Brazil, Japan, Canada, Australia and Britain, starting next month.

Each ad must pass a quality-control test that Facebook administers in conjunction with video analytics firm, Ace Metrix.

Most of the commercials in international markets will not appear on Facebook's Web site until September, as the Internet company spends several months working closely with marketers to ensure the spots meet its quality standards, a Facebook spokesman told Reuters.

But he said companies whose commercials are deemed acceptable could begin airing them on Facebook in June, in time for the World Cup international soccer tournament, a popular event for brand advertisers.

Video ads, along with ads on the Facebook-owned Instagram photo-sharing app, are among the new businesses that analysts believe could turn into important money-makers for Facebook, though the company has said it does not expect video ads to contribute meaningfully to its business this year.

Facebook's ad revenue grew 82% year-on-year to $2.27 billion in the first quarter.

The price that marketers pay to run a video ad on Facebook is determined by the size of the audience as measured by measurement firm Nielsen. Marketers can choose specific times of day for their spots and can target ads according to age and gender.

Online video ads, which typically carry much higher rates than other forms of online ads, could help Facebook bolster its ad revenue in international markets where the company's average revenue per user is lower than in the US and Canada.

Roughly 84% of Facebook's 1.28 billion monthly users are outside of the US and Canada, with 87 million monthly users in Brazil and 34 million monthly users in the UK at the end of the first quarter, according to the company. Daily mobile users in Brazil increased 75% to 35 million in the nine-month period ending in the first quarter, Facebook said.


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