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Facebook Inc (FB)’s New Program Could Generate Billions: Here’s How

Facebook Inc (NASDAQ:FB) has been relatively quiet in the news of late, though it’s sure to be in the spotlight again when the first anniversary of the botched IPO comes up later this month. But now, with Facebook continuing its relentless pursuit of revenue, it is starting to create some headlines with its latest tactic, which looks to leverage the consumer migration from television to the Internet for entertainment, and by extension, advertising.

Facebook Inc (FB), JetBlue Airways Corporation (JBLU)

Facebook Inc (NASDAQ:FB) is reportedly preparing a new advertising opportunity for its partners beginning this summer, which will invade users’ Newsfeeds. Facebook is apparently close to launching video advertising, with the first ads expected to be seen on the social-networking site sometime in July. The first advertising partners to have the opportunity to use this new platform will reportedly be those on the company’s “client council” – which includes such names as The Coca Cola Company (NYSE:KO), Ford Motor Company (NYSE:F), Nestle and American Express Company (NYSE:AXP).

Word is these new Facebook Inc (NASDAQ:FB) will appear in user’s Newsfeeds and will start automatically but with no sound. Should the user enable audio, the video ad would then start from the beginning. It is reported that Facebook will charge a rate that compares favorably with broadcast television advertising, which averages about $29 per 1,000 people.

The views on Facebook, however, will count even if users don’t enable audio. Facebook would limit each ad to no more than 15 seconds. Estimates are that the new ads could generate nearly $140 million of additional revenue in a quarter, based on current inventory availability, with one analyst predicting by the end of the year the revenue rate could be upwards of $550 million per quarter.

Overall, Facebook Inc (NASDAQ:FB) is working to get in on the rapidly expanding online video advertising market space, which is expected to reach $4 billion in 2013, an increase of more than 40 percent over 2012. And it’s expected to continue to grow dramatically as users are slowly moving from television to the interenet for video entertainment – though TV advertising is still 15 times bigger than online video ads, with a market of more than $60 billion.

What do you think about the concept of video ads in a Facebook Inc (NASDAQ:FB) Newsfeed? Would you find video distracting or disruptive to your experience on Facebook? Let us know your thoughts in the comments section below.


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