Facebook Unveils First Way for Video Partners to Earn Ad Revenue

Social giant testing ‘suggested videos’ with video ads; partners include NBA, Hearst, Fox Sports, Funny or Die, Tastemade

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Facebook is finally introducing a way for video publishers to reap advertising bucks from the billions of views the social giant serves daily — a move that will put new pressure on Google’s YouTube.

Over the last few weeks, Facebook has conducted a small-scale test of a “suggested videos” feature in its iPhone app: When a user clicks to see videos related to one in his Newsfeed, he’s presented with a string of related content culled from all the video that’s posted to Facebook. (YouTube has done this for years.)

Facebook soon will add something else to “suggested videos”: in-line autoplay ads that appear between the clips. Facebook will keep 45% of the revenue from those ads, divvying up the other 55% with partners whose videos are viewed in the suggested-video window based on time users spend viewing each clip. YouTube’s standard ad rev-share terms for most partners also is on a 45/55 split.

“We’ve heard consistently from media companies and other video creators that if they were able to make money from their videos, they would publish more,” said Dan Rose, Facebook’s VP of partnerships. “We hear they get a lot of value from the distribution and promotion of their videos on Facebook… and we think this product will amplify that.”

Fox Sports, the NBA, Hearst, Funny or Die and Tastemade are among the media companies working with Facebook on the test of the suggested-video ads. All told, the company is working with “a few dozen” premium video partners on the test, according to Rose.

For now, Facebook is not allowing partners to sell video ads on the service, but Rose didn’t rule out the company taking different approaches in the future. The ads delivered in the test of “suggested videos” will come from the pool of video ads that marketers have already bought for Newsfeed — essentially bonus impressions they won’t pay for, according to Rose.

The NBA, over the course of the 2015 Finals series, delivered more than 100 million video views on Facebook, up 180% from last year, said Melissa Rosenthal Brenner, the league’s senior VP of digital media. With the new ad approach, she’s optimistic that the NBA can start to monetize its content on the social site.

“We love how Facebook is thinking about how you provide a richer video experience… and create unique, valuable opportunities for advertisers,” she said. The NBA also works with multiple digital outlets, including Twitter and YouTube, to distribute content.

Over the next two weeks, Facebook plans to widen the test of “suggested videos” to several million users and start serving up ads. For Facebook — which has more than 1 billion active monthly users worldwide — millions of users still represent a relatively small test. Initially, the suggested videos will be available only for Apple’s iPhones. The company plans to bring it to Android devices and the web in the coming months.

“We think this will be net positive for (video) partners,” Rose said. “They don’t have to publish anything more than they already are – and they’ll start getting checks from us.”

Facebook’s early tests of “suggested videos” indicates it will boost time spent viewing, but Rose said the company needs to gather more data. “One of the things we’re trying to determine is how these ads perform – we need to see how they perform before we start charging for them,” Rose said, who added that Facebook has yet to determine the pricing model for suggested-video ad spots.

Facebook, which claims it delivered 4 billion video views per day on average in the first quarter of 2015, has been busy on the video front. Just this week, the company said it tweaked algorithms to surface more relevant videos in users’ Newsfeeds and started offering advertisers the option to pay only if their spots are viewed for at least 10 seconds.

Ultimately, Facebook decided to take the approach of delivering ads in the suggested-video streams, and prorating rev-share based on user viewing time, instead of going the pre-roll route.

Serving pre-roll ads just wouldn’t work for how Facebook displays videos, which automatically start playing (with the sound muted) in users’ Newsfeeds, Rose said. “When video is autoplaying, it’s very hard to put an ad in front of the content because someone isn’t sure what they’re going to see after the pre-roll,” he said. And, as Rosenthal Brenner put it: “A 30-second commercial for a 10-second video is not the best user experience.”

Facebook’s launch of an ad revenue-sharing program for content partners certainly should better equip it to rival YouTube as a home for Internet video.

But Facebook still must come up with better tools for content creators to pull down (or monetize) copyrighted material that’s illicitly posted to the social service, as YouTube has done with Content ID, according to some industry execs.

In a series of tweets last month, Fullscreen CEO George Strompolos complained his company’s content was being “stolen” by Facebook users and that Facebook must do more than simply comply with Digital Millennium Copyright Act take-down notices. Facebook said it is “actively exploring further solutions to help (intellectual property) owners identify and manage potential infringing content, tailored for our unique platform and ecosystem.”