Facebook is hoping that its hotly anticipated video-ad units can be a more-than-$4-million daily business out of the gate -- if its asking price is met.
The social network still hasn't finalized the format of the video ads, but it's been shopping the product around to agencies, looking to lock down commitments for the first available slots in June or July, according to three executives briefed on the product.
While the format of the units isn't totally nailed down, it's widely assumed that they'll be autoplay and presented in a video player that expands beyond the main news-feed real estate to cover the right- and left-hand rails of users' screens on the desktop version of Facebook, which Ad Age reported in December. (Facebook has also been at work on a way to make video ads stand out on mobile apps, though it's still unclear how it intends to accomplish this.)
In its own version of an upfront marketplace, Facebook is currently selling four daily summer "slots," each targeting a relatively large demographic: women over 30; women under 30; men over 30; and men over 30. The ads will be capped at 15 seconds and frequency capped to ensure that no user sees more than three per day, with an asking price of upwards of $1 million, according to one executive.
Assuming four daily advertisers will meet Facebook's asking price -- a big, and unlikely, if -- it would be earning more than $4 million per day from the ads.
It's Facebook's version of a takeover, but with TV-like scale and measurement. And it could be eagerly sought after by agencies that have plenty of TV ad creative on their hands and not enough TV-like web inventory to place it in.
"Aside from a YouTube front page or a Yahoo front page -- which certainly isn't what it used to be -- this could be the answer," said a different executive, noting that the spending commitment Facebook asked for was in the high six figures, verging on $1 million. Facebook declined to comment on the video ads or the price tag.
The intention is to tap into deep TV budgets, but it represents a significant change of course from last year when Facebook was headed into its initial public offering. Executives from the social network turned General Motors down when the automaker's top marketing brass asked for larger, higher-impact Facebook ads that would allow it to take over a page and not be constrained to the right rail; GM subsequently quit Facebook advertising in mid-May and only resumed last week.
In the intervening year, Facebook's major ad product launches have been less about integrating its social graph and more about taking advantage of its massive scale through familiar web advertising models. (Its ad exchange, FBX, is the most notable example.) The coming video ads would seem to follow that trend, since they'll be shown to all users who fit a broad demographic profile, not because of the social context of a Facebook friendship with someone who's "liked" the brand advertiser or movie studio showing the ad.
Though setting up an upfront marketplace to let agencies reserve video inventory could help stir up demand for Facebook's video ads, the current price tag is likely to be a barrier to entry, as well as concerns about the backlash from users, according to one executive.
Facebook declined to comment on the video ads.
Contributing: Michael Learmonth, Jason Del Rey
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