How Facebook Is Sharing Video Ad Revenues With Publishers

Facebook's Suggested Videos gets an expansion on mobile and new publishers that gets creators 55% of ad revenues from Facebook.

Facebook_Videos

Felix Kjellberg, aka PewDiePie, who uploads videos of himself playing computer games for a living, earned $7.4m in 2014. PewDiePie is not the only vblogger that is making money from the grandfather of video social network, YouTube. This is one big reason why video content creators are still sticking to YouTube and creating trouble for Facebook’s video segment.

Facebook has been fairly aggressive on the product and PR front this year after it was revealed that it serves 4 billion views every day. However problems like the way video views are counted and Freebooting has put the brakes on Facebook’s growth. It is already solving these two major problems but it has also been thinking of sharing revenues with content creators like YouTube has been doing for years.

Earlier in July, Facebook decided to offer selected video creators — including the NBA, Fox Sports and Funny or Die — a cut of advertising revenue that appears with their content on the social network. Facebook decided a revenue split of 55% to the video creator and 45% to Facebook, which is the same as the terms on YouTube. “Partners say they’d publish a lot more if they could get benefit of distribution but also make money,” Facebook vice president of partnerships Dan Rose told Forbes.

To make sure such video finds an audience, Facebook created a new video viewing experience called Suggested Videos. The new feature was rolled out on the iPhone app, Android and web were launched later.

When someone clicks on a News Feed video, he or she will be taken to a new page with a larger video view panel along with Suggested Videos, videos listed similar to the original video. The video there will play automatically as the user scrolls. Video ads will be injected with the rest of the content — and unlike video ads in the News Feed it will play with sound given that a user there has already chosen to hear audio.

After the three month test, it’s showing up more in mobile news feeds. Adweek reports that during a small test late last week, ads for Under Armour, Procter & Gamble, Taco Bell, Jet Blue, Target and KFC were playing alongside publishers’ clips.

The video ad business is typically based around pre-roll ads, which Facebook doesn’t offer. “We have no plans for pre-roll video ads. We’re pleased with the growth in consumer video and paid video. That’s our strategy,” David Fischer, the company’s vice president of global business and marketing partnerships had said to WSJ in an interview last year.

The new format that gives Facebook another feed to show off ads that autoplay with sound confirms its push to make video a top priority. It also offers a new revenue stream the company wasn’t getting before. However, it would be interesting to see how many video ads Facebook would want to cramp in, at a time when the user Facebook News Feed today is just about auto playing videos.

Surely, Facebook has a bigger reach and YouTube is very well aware of it. During a panel at Variety’s Entertainment and Technology Summit, Facebook ad product lead Ted Zagat said that the company expects video to effectively take over the social network in the coming year or two. With these solutions the social networking giant is all set on the right path to give stiff competition to YouTube.