M+E Daily

By Paul Sweeting

Over-the-top and online video have diverted a lot of viewing away from traditional TV channels but up to now advertising dollars haven’t followed those eyeballs online in numbers commensurate with amount of viewing they represent. That could start to change in 2013, however, as Facebook rolls out a plan for inserting video ads into users’ news feeds.

One big reason TV ad budgets haven’t shifted online as rapidly as viewers have is that they lack an easy or obvious place to go. The bulk of online TV viewing, for instance, happens either on Netflix, which does not carry advertising, or on platforms like Hulu or YouTube, which much smaller ad loads than traditional TV. Other online outlets simply lack the scale necessary to attract TV ad buyers.

According to a report by AdAge, however, Facebook’s new online advertising strategy is explicitly targeting TV ad budgets, which the social network sees as ripe for the taking.

All of the executives interviewed view the new video ad product as a blatant attempt on Facebook’s part to wrest big ad dollars from TV budgets. Ad agencies have plenty of TV spots and increasingly want to extend their reach on the web. But TV-like inventory on the web is scarce, which is why ad rates at places such as Hulu are so high.

Adding video ads to Facebook would create a huge new trough of inventory created essentially from scratch. With Facebook’s scale, advertisers could target demographics as they do on TV as well as use the gross ratings point currency, which they use for TV.

Although Facebook has quietly been developing the new video ad plan for several months, many questions  remain unanswered at this point, such as whether brands will be able to place ads against the entire universe of Facebook users or only against those who “like” the brand and their friends, according to AdAge. Also to be determined is whether video ads will begin playing automatically or only when clicked on.

Significantly, while Facebook plans to serve the video ads to both desktop and mobile users, it has been emphasizing the mobile version in its presentations to ad agencies. According to comScore, more than 50% of Facebook usage now happens on mobile devices. Up to now, however, the social network has derived almost no revenue from mobile platforms due to the lack of a suitable mobile ad product.

If the new video ad insertion plan pans out, in other words, it could achieve two critical goals for Facebook: tapping the huge pool of advertising dollars currently going to television; and solving its mobile monetization problem.

Whether Facebook users are prepared to sit through a lot of video ads is another question.