Mark Zuckerberg has been building a video empire with Facebook. A couple of years ago, they began aggressively showing videos to their users. In fact, by 2016 they reported users were watching videos for 100 million hours per day. It might be fair to say that Facebook has been obsessed with video. And in January, Facebook decided it was time to turn it into a business with its “mid-roll video ads”.
What Are Mid-Roll Video Ads?
Facebook is showing ads in the middle of its videos. This will give publishers the opportunity to insert ads into their video clips once people have watched for at least 20 seconds. The clips should be at least 90 seconds long to qualify for the ads. Facebook sells the ads and the revenue it gets is shared with its publishers. Publishers will get 55% of the sales. And guess what, it’s the same split offered by YouTube. But unlike YouTube or most of the ad industry, Facebook is against the idea of pre-roll ads where ads are played before the video clip.
It’s expected this feature will create a big impact for Facebook in terms of revenue. Because all kinds of videos are uploaded and watched by a wide range of audience, across Facebook. Moreover, these ads will use the News Feed space which is Facebook’s primary source of content distribution.
Today, ads are part of the online experience. Not a single day goes by without seeing an ad during your online browsing. This hasn’t changed the way people view ads—they find it annoying. Though digital advertisers have all the data they need on their target audience, the ads don’t resonate with viewers. No wonder people find digital ads more annoying than television ads.
Anyone in the ad industry would agree that effective advertising is all about the right timing. Facebook ads have worked so far because they interact with users at the right time with relevant content. There was a context in the content and the ad placements. Additionally, Facebook was careful not to interrupt the user when consuming the content. For example, when a user views a photo gallery on Facebook, they aren’t shown any ads. They don’t distract the user with a call to action when looking at their friend’s latest profile photo.
User Experience With Mid-Roll Video Ads
“We want people to think of Facebook as a place for interesting and relevant video content from professional creators as well as their friends,” said Mark Zuckerberg. But with mid-roll ads, Facebook has drifted away from their solemn vow of providing users with an interruption-free experience. And if Facebook isn’t careful, they will be delivering the most annoying user experience to its viewers.
Knowing television commercials were preferred to digital ads, Facebook decided to play ads in the middle of the video clips, similar to television commercials. Smart move, huh? Not really! It’s risky with nearly 57% of viewers disliking video advertising. This leads us to the next aspect of advertising.
Reach and Revenue
Marketing on Facebook comes with its own set of challenges. Mid-roll ads are no different. These ads enable more video engagement because a user who has spent 20 seconds watching a video clip won’t close it once the ad begins to play. They’ll stick around and watch the clip (and the ad) till the end. However, a study showed that the chances of the mid-roll video ad being seen are way less that pre-roll ads.
The reason is that mobile users account for over 60% of Facebook’s total users. In fact, nearly 80% of its revenue comes from mobile users. Mobile isn’t good for the mid-roll format since a study revealed that mid-roll ads communicated brand messages best on large screens. (You see why it worked well for television commercials and why they weren’t as annoying as digital ads).
However, publishers saw the launch of mid-roll ads as having great potential. After all who wouldn’t eye the 55% revenue that can be earned from one of the most widely used networks, right? Publishers found this an opportunity to create more content, turning it into a source of revenue. Despite Facebook’s rules on when the ad should be inserted and how long the video clip should run, it did not limit the potential to monetize the content. Or so the publishers thought.
One of the publishers earned $11,000 in revenue for videos that generated 24 million video views on Facebook. However, it only needs less than 2 million views to make the same amount of money from YouTube’s pre-roll ads.
Facebook is now stuck between the devil and the deep blue sea. In a desperate effort to generate ad revenue, Facebook created mid-roll ads. But at the cost of good user experience. So, how did it fare? Facebook’s Q1 earnings showed growth. We’ll know more about mid-roll ads when Facebook’s Q2 earnings are reported.