2Q EARNINGS: Facebook Video Ads Are a Hot Topic

PremiumVideoAdsAnnouncement650Not surprisingly, advertising was a primary topic of conversation during Facebook’s second-quarter earnings call Wednesday, and video ads were discussed on several occasions.

Chief Operating Officer Sheryl Sandberg said during her opening remarks Wednesday:

We also introduced premium auto-play video ads this year. Video on Facebook helps brands extend their TV investments by combining traditional reach focus campaigns with our unparalleled targeting abilities. Today, we run about one-dozen campaigns, and the early data show promising results. We’ll continue to roll this product out slowly and carefully. Similarly, we’re seeing positive early demand for marketers for ads on Instagram, and we’re rolling these ads out carefully, as well.

Finally, earlier this summer, we announced the acquisition of LiveRail, a leading online video-advertising platform that enables customers like MLB.com and A&E Networks to monetize their video inventory efficiently. We have a lot to do here, but with LiveRail, we’re investing in tools that can improve the relevance of video ads across the Web.

During the question-and-answer period of the call, in response to a question from UBS Analyst Eric Sheridan, Sandberg added:

Video is really important. It’s one of the fastest-growing ad mediums out there in both desktop and mobile. So LiveRail has a leading online video-advertising platform, and we think we can use it to effectively expand video ads to marketers and to publishers outside of Facebook and offer greater audience reach to video advertisers.

Goldman Sachs Analyst Heather Bellini asked:

And then the follow-up question would just be related to how your conversations with advertisers are changing as people start to think collectively about their TV and video budget together. I’m just wondering if you’re starting to see your conversations with big TV advertisers start to change somewhat over the last six months or so.

And Sandberg responded:

I do think one of the things that’s happened in the past really year, year-and-a-half on Facebook is people understanding how strong the creative opportunity is. We’ve built out the technology platform and made our product investments, and we’ve really created — particularly with the move to mobile and our ads on News Feed – an opportunity to do great creative storytelling. A great recent example is the Progressive baby ads, if you’ve seen them. They’re really engaging and really fun, but they’re making a really important point, which is that people should be buying their own insurance, but the ability for them to do that ad is based on the technology we created and also the great work they’ve done with Arnold Worldwide, their agency on the creative part.

And so I think for a long time, people have thought TV was for creative storytelling, and online ads work for more targeted text-based results. And I think we’re seeing that change, which means that the way people approach TV, they’ll also approach Facebook and are starting to, which makes those budgets work much better together.

Finally, SIG Analyst Brian Nowak asked:

You mentioned that it’s the early days on video advertising, and I just wondering if you could talk to some of your early learnings, what you’re pleased with and where you see areas for improvement, and which metrics you’re gauging to determine when to undergo a broader rollout.

Co-Founder and CEO Mark Zuckerberg responded:

The biggest thing that we want to make sure is that quality is really good as we roll this out, and that’s going to be the same on all of these different initiatives. And one of the reasons why we’re optimistic about video ads — auto-play specifically — is that the format for both organic and paid content is that you’re scrolling through News Feed and, if the content catches your eye and you like it, then it’s playing and it’s loaded, and you can just easily continue watching it. Or otherwise, the person has complete control, and if they don’t like it, they can just keep on going through it. So the content has to be really good, and we think that that’s going to be a real high-quality experience.

There are still a number of things that we really want to prove and make sure that we’re doing well here. We want to make sure that when people see an auto-play video, that’s not only paid content. We want a lot of that to be organic content, as well. So we’re trying to ramp up the amount of public content and content that people share at the same time that we’re ramping up on the auto-play video ads.

We also want to make sure that this doesn’t consume a lot of people’s data. So we’re just being really careful about how we handle that and getting that really right across different markets — that’s going to be a different thing that we want to be really sensitive to. In a word, this all comes down to quality, and we’re more focused on just making sure that this is the right and best thing over time than something in the near-term.

Readers: What have your impressions been thus far of video ads and premium video ads on Facebook?

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