Facebook (NASDAQ:FB) is set to launch video advertisements in users’ news feeds, a new report from the Wall Street Journal said, adding that the social networking giant is expected to make the announcement on Tuesday and that video ads are likely to start appearing on the site Thursday.
Citing people familiar with the matter, the Journal said that the new program will be launched on Facebook's mobile applications as well as its desktop website, and could help the company capture a share of the $66.4 billion that companies are likely to spend on advertising in the U.S. in 2013.
According to the report, a short teaser for the upcoming Lions Gate Entertainment Corp.’s (NYSE:LGF) film “Divergent” could be one of the first ads to appear on people’s news feeds. In addition, the ads are expected to play automatically, regardless of whether users click on them -- a move that could annoy many users of the social network.
But, both Facebook and its advertisers have reportedly been watchful about the impact of video ads on users -- a concern that led many to believe that Facebook’s video ads would not be available until early next year.
While it is still unclear how long the run-time for each video ad will be, Facebook could offer ads of up to 15 seconds, the Journal said. Some anonymous executives also recently told the Journal that Facebook could charge $2 million a day to let advertisers reach the company’s audience, typically aged between 18 and 54.
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Facebook is also reported to have distributed a guide to its advertising technology partners on how to sell ads to marketers. The guide, according to a leaked slide deck for video ads obtained by TechCrunch, indicated that Facebook intended to compete with both YouTube and television advertising.
Here is an excerpt from one of the slides:
For example, on TV, advertisers don’t always know who people are, and over deliver to certain people and can’t reach other people. So advertisers end up hitting the same people over and over again with a large portion of the audience being underexposed… With Facebook, you can precisely reach the audience you want, and know that your impressions are being delivered to the right people.
It would be interesting to see how Facebook can make money by beaming ads onto users' newsfeeds given the fact that it will be jumping into a crowded market.
While YouTube’s video advertising is up 75 percent this year over 2012, TV ads still beat the online video ad market, Forbes reported, adding that Facebook’s video ads are unlikely to be a big revenue generator until 2014.