Despite Facebook CEO Mark Zuckerberg’s long-held stance against pre-empting videos with advertising, Facebook plans to test out pre-roll ads, Ad Age reported on Friday.
A Facebook spokesperson declined to comment on the report, but a person familiar with the matter told Marketing Land that the company is expected to limit the pre-roll ads to Facebook’s new video hub, Watch, and not attach them to videos viewed in the traditional News Feed.
Facebook’s adoption of pre-roll advertising may be something of a shock given its executives’ past comments on the format. But the context of those comments is important. “We don’t think it would be a good experience in news feed,” said Zuckerberg during the company’s Q2 2016 earnings call. That was in July 2016, when Facebook’s only video experience was in the News Feed. The company had not yet rolled out apps for connected TVs or unveiled its dedicated video hub for TV-style shows, Watch.
But Facebook didn’t want the fact that videos would be watched within the feed to curtail its ability to make money from those videos. So it compromised. Instead of pre-empting videos with pre-roll ads — which would likely result in people watching “a lot less of the organic videos that were posted,” Zuckerberg said — Facebook would interrupt those videos with mid-roll ads, or “ad breaks.” That way, a video could pique a person’s interest first, and then Facebook and the video’s creator could capitalize on that interest by inserting an ad break after at least 20 seconds.
However, Facebook’s ad breaks have not proven to be so profitable. They have generated “pretty meager” revenue for publishers who receive a share of the revenue from ads Facebook inserts in their videos, according to Digiday. If that remains the case, it could hamper Facebook’s ability to attract programming from publishers at a time when YouTube, Snapchat, Amazon, Netflix, Hulu and other video services are vying for original shows. It could also hurt Facebook’s ad revenue growth at an already delicate time.
Facebook has maxed out the ratio of ads to organic posts it can squeeze into people’s news feeds. That ad load issue is expected to slow the company’s ad revenue growth, and Facebook’s ad breaks have only complicated matters. While video ads are typically pricier than other ad formats, and in-stream video ads are considered particularly premium, Facebook’s mid-roll ads have not substantially boosted the company’s average ad prices and have cannibalized its ad supply. “There are less impressions when people are consuming video, so that also is a factor as more time is spent on video,” said Facebook’s CFO David Wehner in November.
By making people view an ad before they can watch a video, Facebook could recoup ad impressions and revenue. It could also boost advertiser completion rates and make video ads more attractive to attention-seeking brands. That assumes people will be willing to sit through the pre-roll ads. That’s why Facebook apparently plans to only show these ads within Watch, where a person is expressly indicating their intent to watch a video, just as they do when they turn on their TV or open YouTube. On those platforms, people are accustomed to ads interrupting videos and pre-empting them. And it seems that soon that will also be the case on Facebook, though only within Watch. At least for now.