Facebook’s Open Challenge to YouTube

Facebook recently announced that it is testing a new ad format, called the mid-roll ad format. This format can be used by its publishers to insert ads into their videos and even earn revenue from these ads.

In 2015, Mixpo had conducted a survey on advertisers’ preferences, and according to the survey of 125 agencies, brands and publishers, 87 percent planned to run their video ads on Facebook. Whereas, in 2014, about 77.8 percent of survey respondents ran their video ad campaign on YouTube and only about 63 percent ran their video ads on Facebook. This is a huge jump and also clear evidence of how Facebook is progressing in the ad business.

Coming back to the recent developments, according to Facebook, the ad revenue earned from each video ad will be split between the publisher and Facebook, with the publisher bagging 55 percent of the total revenue. The above is the exact revenue model that YouTube follows. Since its induction, YouTube’s success has been attributed to this revenue sharing model, which encouraged publishers to push for better content and which also resulted in more relevant and user-likeable content on the platform. When it works both ways, the quality of the website is obviously not severely compromised. Now what if Facebook starts to implement the exact same model with its video ads on the platform? Facebook clearly has a much larger user base, and with the majority of share the publishers will earn from the ads, it is quite likely that the platform will lead.

We all did see this coming. Through 360-degree video and auto-play, Facebook has been promoting videos on the platform for a while now. At a press conference back in 2016, Nicola Mendelsohn, Vice President of Facebook Operations had said, “Facebook will be probably all video. Video is the best way to tell stories in this world” and “helps us to digest much more information with a year on year decline of text.” 

According to Facebook, these video ads will be shown for 20 seconds in a video, and can be displayed only in videos that go on for over 90 seconds.

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