FRANKFURT/PARIS (Reuters) - Facebook (FB.O) is gaining ground on Google’s (GOOGL.O) YouTube as an outlet for big companies to market their products via online videos, the fastest growing category of Internet ads, a report published on Monday said.
The competition for video viewers opens up a new front in the clash between the two web giants that already compete in other types of advertising given their appeal to young and international consumers, Ampere Analysis said in a study.
London-based Ampere predicts a new advertising “arms race” between the two rivals, neck and neck in terms of audience sizes with around 1.4 billion to 1.3 billion monthly active users, respectively for Facebook and YouTube. That means consumers are likely to be forced to see more ads, but also enjoy a richer range of video programming as a result, it said.
The Internet will overtake TV advertising in 12 key markets, representing 28 percent of global ad spending by 2017, separate research by media-buying firm ZenithOptimedia said on Monday. Ad spending is projected to reach $531 billion this year.
Online video is now growing faster than any other digital category or subcategory, rising 33 percent in 2014, and is forecast to grow 29 percent a year through 2017, Zenith said.
The two reports were released as the week-long Cannes Lions international advertising conference opens this week.
Ampere Analysis argues that Facebook is morphing from a platform most advertisers use for building general brand awareness to one that can deliver “pre-roll” advertisements that marketing companies prefer for ensuring their messages are actually viewed.
Currently, YouTube remains a more flexible marketing platform, offering advertisers the full range of video ads which run before, during or after a video program is shown.
“If the social network’s own video ambitions are to be realized, and if it is to convince content owners it is a viable alternative to YouTube, it must deliver comparable returns,” Ampere Research Director Richard Broughton said.
Differences in ad formats translate into the rates the Internet platforms can charge advertisers. While YouTube charges advertisers when an advertisement has been viewed, Facebook offers the less advertiser-friendly model of charging once three seconds of the video have been delivered, Ampere noted.
Most content providers now use Facebook for branding and awareness purposes, but trial revenue-sharing deals with the National Football League and Fox Sports in the United States pose a serious challenger to YouTube’s lead, said Ampere, a research firm that serves media companies and investment banks.
Editing by Keith Weir