Jewish Business News: Facebook to Share Ad Revenue From New Video Service

The ultimate goal of this new feature is for people to discover the “best and most relevant videos” to them on the social media site, Facebook said.

Facebook is ramping up efforts to snare ad budgets from YouTube by revealing it will share ad revenue with video creators using its site. This could eventually draw more video creators to Facebook and away from YouTube, and make the social network a more popular destination for video.

In addition to this, instead of inserting ads out of context in the news feed, now ads will be shown next to the type of high quality content they align themselves with on TV, for more views.

The payment model will work alongside a new feature which suggests videos to Facebook’s users. This means that it is also giving 55 percent of revenue to the video creator while the remaining 45 percent goes back to Facebook. “We have found that this helps us show people more videos that they are interested in”.

The company said that the initiative is intended for smartphones that is a source of 75% of video views on the social network. According to RBC Capital Markets analyst Mark Mahaney, for YouTube, the mobile contribution is 50%.

YouTube has been far ahead in generating revenue, however.

Facebook videos now reach more than 4 billion views every single day and there is a lot of revenue potential for the company and its partners. “If I were Google, I would watch out”. For example, if a user clicks on a video about cats, they’ll be taken to “Suggested Videos” news feed where all other cat videos, or related content will be presented, posted by big brands.

Facebook, Google and Twitter are all acquiescing to the requests of marketers and are looking to enhance their video ad platforms.

Early reaction from marketers was generally positive. Unlike the auto-play ads that populate the News Feed, these ads will play sound automatically. Your business or page has to get the customer to look at the video.

But there was skepticism as well.

The economics will differ from YouTube.

Video ads on Facebook are right around the corner.

Numbers like those have made it increasingly competitive with YouTube, but one area that Facebook has been seriously lagging was ad offerings.

“We had no economic incentive to keep doing that”, Starzan said.

“Facebook is very adaptable”, said Ms Marouli.

But Forget the News Feed; Only “Suggested Videos” Will Benefit But the vast majority of brands and creators will have to wait before they get a piece of the pie.

Suzanne Vranica contributed to this article.

Separately, TheStreet Ratings team rates FACEBOOK INC as a Buy with a ratings score of B.