Facebook news at Digitalis

“Video in 2016 will probably be as big a shift in the way people share and consume as mobile was in 2012.” So said Mark Zuckerberg at the recent Mobile World Conference in Barcelona, and recent developments at Facebook show that they are taking this shift very seriously. Campaign reports that video distribution on mobile now appears to be at a tipping point and Facebook is now seeking to challenge YouTube in this space.

In recent years Facebook has been making a play for TV ad budgets and success has hinged on its auto-play video ads. A recent survey of 2,000 ad professionals shows a big jump in willingness to move ad spend from TV to online. Further results show that 62% expect to spend more with Facebook; of particular note 69% of respondents have a positive attitude towards auto-play.

Video is a key part of Facebook’s efforts to provide a more integrated ad offer. Digital advertising strategies used to be targeted on conversion but, as highlighted by Ben Thompson in Stratechery, moving into video has enabled Facebook to offer a strong brand awareness proposition too… Note Sheryl Sandberg’s fascinating description of how, in the lead up to Black Friday, Shop Direct used Instagram Cinemagraph ads (a largely still format with subtle movement) to build awareness, before following up with retargeting across Facebook and then product showcase formats for conversion.

Interestingly, an emerging element of Facebook’s video strategy focuses on captions. It is still early days, but Adweek reports Facebook has found that captions on video ads increase viewing time by 12% – this delivers a significant improvement in brand recall. The approach may hold significant potential amongst silent auto-play users – e.g. those at work, or on the bus listening to music. Our own research reveals users are more accepting of this type of advertising as part of their social media experience.

Facebook’s move into video reaches further than just advertising formats, but also into creating Facebook as a destination for live video and events. Last night it ran a ground-breaking collaboration with the Washington Post providing in depth coverage of the latest US primary debate, adding the sort of social context traditional media cannot.

Further to this, recent reports suggest the company is considering a move into sports rights, with online streaming of American Football being a likely target.

The global TV industry, still dealing with the impact of Netflix and Amazon, is set to be disrupted by yet another play from an internet giant. Facebook Watch is the latest entry into an already competitive market, with Google and Apple also ramping up their efforts in content production. These cash-rich newcomers can afford to think big, too: With budgets of around $2-3 million per episode, the tech giants would be on an equal financial footing with many broadcast and cable networks.

What is the business model for Facebook Watch?

Some publishers have plans to run adverts during the shows to generate revenue and this is expected to have consequences for SVOD services and may mean that Facebook Watch leads tech firms into an era of AVOD models.

This strategy means that analysts are also anticipating a shake-up around advertising revenues. Industry insiders expect Facebook Watch to compete for broadcasters’ VOD ad revenue for several reasons. Facebook’s user base offers a ready audience at scale, Facebook’s data collection allows advertisers to specifically target ads, and its ability to distribute to 200 countries at once offers ease and efficiency.

Broadcasters who have used Facebook as a means of marketing and acquiring an audience may have, ironically, helped Facebook to emerge as a competitor on a global scale.

So what is Facebook Watch?

Facebook Watch is a new video site to showcase content made specifically for Facebook. Initially, only certain people will be able to make shows for Watch, but the longer-term aim is for anyone to be able to create and post video content. Viewers will also be able to communicate with each other during the content streams. It’s not just in-demand content: Watch will feature shows that will air at regular times – such as a weekly professional baseball game. Aside from sports rights, which may yet become a bigger part of the service, Facebook is paying publishers like ATTN and Buzzed to make shows, although the plan is that  majority of shows will be posted on Facebook by the Watch community free of charge.

What does this mean for traditional broadcasters?

Given that Facebook has 2 billion monthly users, analysts are anticipating a shakeup of the market. Cable companies like A&E and WGN have responded to the already crowded landscape by announcing they are getting out of the scripted TV business, but there will still be plenty of content to fight over, given the forecast of over 500 scripted TV shows for the year – double the number six years ago. Broadcasters and networks will face increasing competition given the funds available to the newer entrants. In context, while HBO is working with an annual budget of around $2-3 billion, Netflix plans to spend about $6 billion this year – numbers that are likely to cause concern for traditional buyers of content.

However, industry insiders question whether Facebook will be able to effectively turn itself into a content destination where users go to watch high-quality longer-form content. In addition, if broadcasters respond to Facebook Watch by removing their own content from Facebook, the platform may become less popular.

It will take some time for the impact of Facebook and other tech giants’ entry to be seen, but it is highly likely that as the new ‘content wars’ escalate, consumers are likely to be the only undisputed winner.

For now, we say, Watch out 🙂

error: Content is protected !!