Will Video Ads Wreck the Internet?

Wednesday Dec 19th 2012 by Mike Elgan
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Facebook is reportedly bringing auto-play ads to your News Feed. That's just the beginning.

New reports suggest that Facebook will soon unveil video advertising – basically TV commercials on Facebook.

Unlike TV's 30-second standard for ads, Facebook's would be capped at 15 seconds. The ads will be "autoplay," meaning they'll play without any action by the user.

While 15 seconds is short compared with TV, it's long compared with online users' tolerance levels.

The ads would show up in your Facebook news feed in desktop browsers, as well as on mobile phones and tablets.

Auto-play, in-stream advertising is going to annoy users, big-time.

As I mentioned in this space previously, Facebook can get away abusing users more than other social networks because of what I call their "monopoly on everybody."

However, in this case, the advertising feature will probably create a very stark contrast to Facebook's rival Google+, which by the time Facebook rolls out the video advertising next spring I expect to have more active users than Twitter.

Google+ has zero advertising -- they don't even let their users advertise.

But that doesn't mean Google+ isn't supported by advertising indirectly, and video advertising, too.

Google+ is tightly integrated with many other Google services, including Google+'s three biggest sources of online advertising revenue: Search, YouTube and Gmail.

Google has tapped into a brilliant formula for competing with other social networks, especially Facebook.

Google uses its fast-growing social network to drive usage of the other properties, and harvests user data to be used as "signals" for those other services, both for serving up relevant content and also for relevant advertising.

Yet the social network itself doesn't have -- doesn't need to have -- any advertising at all.

I think there's a real possibility that Google+ will never have advertising, while Facebook increasingly pushes big, noisy, intrusive ads into the streams of users.

Why Video Advertising?

Facebook is apparently aware of the fact that only about 12% of the biggest spenders on TV commercials also buy online video ads, according to a study by Kantar Media.

Facebook is thinking big here. A certain class of advertiser spends billions on big-ticket, prime-time TV commercials, and does not spend anything on online advertising.

Online sites want a piece of that revenue, and Facebook thinks they've got a way to get some.

Meanwhile, a different class of advertiser embraces online advertising for two reasons. First, it's much cheaper. Second, you can segment your audience, especially on the social networks.

For example, if a company sells make-up, they can advertise exclusively to women, and even target them based on age, income level and how much they travel.

Facebook's plan, no doubt, is to use its massive user network to create the best of both worlds for big-ticket advertising. They'll want to attract the reluctant TV advertisers to pay big bucks to reach targeted segments of the Facebook user base.

It's a great strategy from a business perspective. By keeping ads expensive, they'll create artificial scarcity and incentivize the big advertisers who will know they won't be shuffled in with and drowned out by the regular flood of online video advertising.

And Facebook will no doubt manage the balance between gaining maximum video ad dollars on the one hand and user defections on the other.

Facebook is very adept at the Silicon Valley approach to iterative tweaking, which replaces the normal business approach of "ready, aim, fire" with the Silicon Valley way of "fire, aim, fire, aim, fire, aim" and so on.

Facebook's philosophy appears to be based on the maxim that it's easier to ask for forgiveness than permission.

Facebook pushes new privacy, advertising or other envelopes hard. If users rebel, Facebook apologizes quickly and withdraws. If users don't resist, they move forward.

Video ads will no doubt be executed with the same approach. If users hate it, but keep using the network, then Facebook will probably keep the advertising. Eventually, users will get used to the ads.

But if users start defecting, and the pundit criticism is heavy, then they'll apologize and retreat and regroup.

The Coming Video Ad Tsunami

The consensus so far is that Facebook's new video ads will hit the social network in April.

By that time, the current wave of video advertising online will be a tidal wave. Why? Because video ads work.

As information overload and social network fatigue overwhelm users, they gravitate to pictures and video -- especially video.

If you've ever been to a technology trade show, you've seen this phenomenon. Some no-name Chinese vendor will demonstrate their video chip by playing the movie Top Gun on a big TV. Burned out and overwhelmed attendees will stand there like zombies watching the movie. They have no interest in the chip and no interest in the movie. It’s just an escape.

It's the same reason people like to watch TV after a hard day's work: It's actually easier to watch a video than it is to think.

Video content nearly always has pre-roll video advertising -- those ads that play before the content you want to see starts playing. These have gotten longer and more intrusive over the past couple of years. It's not clear if that trend will continue.

AOL recently found in a commissioned study that short videos do a better job of selling products than longer ones.

Still, whether they keep getting longer or start getting shorter, video ads online are definitely going to become more common.

Linkedin recently announced that they accept video advertising on the network. Advertisers must first post their ads on YouTube, then submit the link to the YouTube video into their online ad system.

And we're going to see video ads in tablet and phone apps. For example, a company called YuMe recently announced a tablet-specific ad program.

And video ads will be showing up in other places as well, including video games.

As advertisers rush in to take advantage of the new format, users may grow tired of it. Or they'll accept it.

Either way, it's coming.

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