Facebook: ‘video is winning in the auction if it’s higher priced’ as daily views top 4 billion

Advertisers are gravitating more toward Facebook for video uploads with many willing to bid higher on the format to get their ads on the social network that now serves up more than four billion videos to users daily.

It is a sharp rise on the 3 billion daily views it reported in January, reflecting The momentum it gained in the last quarter. However, the company declined to say how much of the video spike came from ads versus user-uploaded content.

One key factor for the stellar viewing count is that videos uploaded to Facebook now play automatically, with each counted as a view if it appears in a person’s News Feed for three seconds or more even if they do not actually click on the video to watch.

The issue does not seem to have perturbed advertisers with many seemingly prepared to overlook it in favour of its strong targeting.

While it is still early days, video does displace other ads in the News Feed, the company revealed.

Speaking to analysts on a conference call yesterday evening (22 April), Facebook’s chief financial officer David Wehner said it meant that video is “effectively winning in the auction if it’s higher priced”.

Buoyed by its burgeoning ad stack of Liverail, Atlas and Facebook Audience Network, the social network is looking to push more video, which command higher ad rates than other types of online ads, particularly through native.

“So if somebody’s willing to pay more for a video, it’s going to get served before another type of format ad,” Wehner added, though there’s not really a price differential advertisers are paying for video it’s just that they “are willing to bid for the format you want to show to the people that you want to show it to and that’s how the system works”.

Ultimately, Facebook sees video as a way to pull more marketers to mobile. More than seven in 10 (75 per cent) of global video views on the social network occur on mobile, which now accounts for almost 75 per cent of its revenue. Mobile ad sales rocketed 59 per cent year-on-year to $2.59bn in the three months to March, while total earnings hit $3.54bn, up more than 40 per cent from a year earlier.

Debra Aho Williamson, principal analyst at eMarketer, said the results offered a “better idea” of how the company's various properties are coming together.

"However, we're still waiting for indications of how much ad revenue Facebook is getting from Instagram, and it will be important in coming quarters for the company to start to show how much momentum it's gaining in video advertising and off-Facebook ad targeting,” she added.

Looking ahead, the business will push harder for brands to synchronise their Facebook and Instagram campaigns in order to target more video to more people. Speaking on the same earnings call, chief operating officer Sheryl Sandberg used Lionsgate’s current ad campaign as an example of how an advertiser targeted young women with multiple videos on Instagram over the last few weeks before retargeting the audience from the burst of activity on Facebook.

Despite the growth of its mobile offering and richness of its targeting, Facebook believes there is still massive headway for growth. “Even for the largest clients we have, we are a very small part of their budget,” said Sandberg.

“I don’t think we have any large clients, if you look at 25 per cent in the US of consumer media is on mobile and then 20 per cent of mobile time goes to Facebook and Instagram would be 5 per cent of US consumer media time. With our largest clients, we’re not close to 5 per cent of their spend. And so I think we have a considerable opportunity to grow and we also expect those underlying numbers in time spent on mobile to grow.”

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