By Alexei Oreskovic
SAN FRANCISCO Dec 17 Facebook Inc took a
first step on Tuesday toward selling video ads that play
automatically in newsfeeds, moving cautiously to unlock a source
of revenue that could annoy users.
The world's largest social network, which had long been
expected to try and grab a larger slice of the $66 billion U.S.
television advertising market, will start by working with Summit
Entertainment on ads for "Divergent," based on the popular
series of science-fiction books.
Facebook will run video ads
Facebook said video will improve the quality of the ads on
"Marketers will be able to use this new format to tell their
stories to a large number of people on Facebook in a short
amount of time - with high-quality sight, sound and motion,"
Wall Street has been counting on video ads to open up a
potentially lucrative market as the company tries to sustain its
rapid growth. That market is considered crucial for Facebook's
market valuation, and poses a potential long-term threat to
traditional TV networks.
The company's shares, which have surged roughly 30 percent
since September, gained 1.4 percent to $54.57 in morning trading
on Tuesday, aided by Susquehanna and Oppenheimer price-target
"In terms of monetization, the video ads are very
important," said Robert Baird & Co analyst Colin Sebastian.
"They're priced a lot higher than traditional display or
text ads. And it also opens up for Facebook a larger group of
The move could escalate competition between Facebook and
Google Inc, which owns popular video website Youtube,
and which is aggressively courting marketers to run video ads on
Facebook's initial one-day test, which will run on PCs and
smartphones, is likely to be followed by more tests in the
coming months, as Facebook seeks to refine a new ad format that
could be viewed as intrusive by some users.
Among the issues Facebook will examine are the amount of
time people view the ad, the number of users who share the ad
with others, and the number of people who turn on the sound,
according to a person familiar with the matter.
The pricing model for the video ads, such as whether
marketers will pay by the number of overall ad impressions or
only when a user clicks to turn on the sound, is also among the
items Facebook hopes to figure out based on the test results,
the person said.
Facebook said on Tuesday the unpaid auto-play videos that
users have been able to upload since September have resulted in
a 10 percent increase in views, likes, shares and comments.