From this week, many Facebook (FB) users may see their News Feeds fed by Facebook's advertisement videos. The company has announced that from now on, the company will feed the advertisement videos to the users' News Feeds. These videos will run the same way as the videos shared by the friends run in News Feeds i.e. the advertisement videos will play automatically without sound on users News Feeds, and the user will have to scroll or swipe over the advertisement if the user wants to stop the video from playing.
The company mentioned that this is a test launch, and only the limited set of advertisers with specific needs will have the access to this advertising format. To begin with, the company will work with Summit Entertainment and Mindshare to promote a series of videos for the upcoming film, Divergent. The reason cited behind the introduction of this auto-play video advertisement format is the recent growth in the user interaction with the auto-play videos, which are shared through News Feeds between friends/users.
As mentioned by the company:
Through the course of this test, we've seen a more than 10% increase in people watching, liking, sharing and commenting on videos. It's a better experience for people and it's leading to increased engagement.
The company has been offering this service since September to its users, and now the company is willing to put it under commercial use.
- Not a user friendly move:
The company mentioned that people/users will discover more great content in their News Feeds through these fed-in advertisements. As mentioned by the company:
From launching new products to shifting brand sentiment, this video format is ideal for marketers who are looking to make a large-scale impact, and for people who will discover more great content in their News Feeds.
However, feeding auto-run video advertisements to the users' News Feeds is not a user friendly move. News feeds was initially developed as a platform to share feeds from friends and to track the activities of the friends. The users are used to have a total control over their News Feeds.
News Feeds are increasingly becoming a "news and advertisement" feeding platform, which is equally controlled by the company and the user. So, the users will further lose the control of their News Feeds and will have to counter with unsolicited videos that run automatically. The user will have to interact with the video even if the user wants to stop it. This can affect the user experience significantly and will also utilize the users' resources like data and bandwidth.
From the commercial point of view, this type of advertising format is among the best revenue generating formats. This format offers highest user interaction with the advertisements, because the user will have to interact with the advertisement even if he or she wants to close it. Further, if the user found the video interesting, then they will have to interact with the video, as the video auto-plays without sound and needs user action to turn-on the sound. So, it's an ideal format for advertisers, as it gathers highest user attention, which is a key criterion for the success of any marketing /advertisement effort. The company also introduced the format for mobile advertisements.
- Growth in video and mobile advertisement market:
Due to the proliferation of video capable, Internet-connected devices along with the availability of high data transfer speeds, the online video advertisement market is one of the fastest growing advertisement markets. The online video advertisement market is expected to grow at a rapid pace in the next few years. Moreover, due to the rising use of smartphones and availability of quality apps mobile advertising is also growing at a rapid pace.
Current size and past growth:
According to IAB Internet advertising revenue report, both mobile and video advertisement segments were the fastest growing segments of the digital advertisement market for last few years (see the table below).
According to Frost & Sullivan, the worldwide digital video advertising market has increased from approximately $3 billion in annual spend in 2010 to approximately $5 billion in 2012. The market is further expected to grow to approximately $15 billion in 2016, representing a CAGR of over 30%.
- Focusing more on monetization:
This move by the company shows that the company is increasingly focusing on the monetization of its user base. This is a welcome shift in the company's strategy. The company already has a huge user base that is unmatched in the industry, and this is the right time to focus on revenue growth rather than just on the user growth.
Undoubtedly, the format will bring huge commercial success for the company, but the company will have to limit the number of video ads (feeds) to a reasonable extent so that the users do not get annoyed with this format. All in all, an excellent development, which will further monetize the company's huge user base. Many users may not see this as a good practice, but for investors it's the best practice, as it will accelerate the financial growth of the company.
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This article reflects the personal views of the author about the company and one must consult its financial adviser before making any decision.