Facebook said Tuesday that it's testing
video advertisements that show up in its users' news feeds, creating
another potential source of advertising revenue for the social network.
See also: Facebook To Replace 'Hide All' With 'Unfollow' Button
Under the current plan, the
advertisements automatically start playing without sound when they
appear. Users can click on a video to view it with sound, or scroll past
it if they're not interested.
Facebook said it's been testing the
silent auto-playing videos for video content shared between Facebook
users since September, and has seen a 10 per cent increase in the number
of videos watched, liked, shared and commented on.
Investors appeared to give the plan a
thumbs-up, as they lifted Facebook's shares to an all-time high of
$55.18 Tuesday morning. The stock pulled back to $54.67 in afternoon
trading.
Facebook said the new format will allow
its advertisers to reach a large number of people in a short amount of
time, while also improving the quality of advertisements its users see
in their news feeds.
Facebook needs to proceed with caution.
While people have grown accustomed to video ads online, Facebook is a
place where users commune with friends and family and is often perceived
as a more personal setting than other websites where video ads may not
be seen as intrusive.
See also: Now Available “Donate Button" on Facebook
The Menlo Park, Calif.-based company
emphasized that the idea is still in the testing phase and that it's not
currently selling video advertisements. The company wouldn't disclose
pricing, but said its goal is for the test feature to become a premium
advertising product designed to reach a large audience at specific
times.
Meanwhile, advertising spending
continues to rise. According to research firm eMarketer, spending on
digital video advertising will more than triple from 2012 levels to
$9.42 billion in 2017, though that pales in comparison to the TV
advertising market which is expected to reach $75.25 billion by the same
year.
Citi analyst Mark May backed his "Buy"
rating for Facebook's stock, noting that the video ad effort was
expected and could add more than half a billion dollars to the company's
revenue next year and up to $1 billion by 2016.
As part of the test, Facebook said it's
partnering with Summit Entertainment to show a series of videos related
to its upcoming film "Divergent" to a small number of Facebook users on
Thursday.
Facebook noted that for mobile users the
advertisements are preloaded only when the device is connected to
wireless Internet and will not consume additional data. No sound will
play unless a user clicks or taps on the video.
Have something to add to this story? Share it in the comments.
0 comments:
Post a Comment