Video ads could lead Facebook to earn another $1bn next year

Oliver Smith
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FACEBOOK will embark on what could be its next $1bn (£614m) line of business, according to analysts, with the roll out of video ads across the social network later this week.

The company said that the new ads will offer advertisers a way to reach the service’s 1.1bn users with video clips in the news feed that will automatically play on desktops and mobile devices.

In August Morgan Stanley said that Facebook could generate $1bn from video advertising in 2014. Similarly, Facebook’s mobile advertising, which barely existed in 2012, has now grown to generate $988m in revenue during the firm’s third quarter.

“I think it could be, $1bn is not unrealistic,” Enders Analysis online media analyst Ian Maude told City A.M., but warned Facebook could struggle as its primary use is not viewing video.

“The difficulty for them is really how they integrate the format, because instead of people sitting there and watching a video you’ve got people scrolling down their newsfeeds.”

Facebook said: “We’ll continue to refine this new way for brands to tell stories on Facebook to ensure the best experience for people and marketers.”

Deloitte published a report today highlighting the rapid growth of video advertising revenue in the UK. Over 33 per cent of online advertising revenue growth for UK websites in the third quarter of 2013 came from video, it said.

Online video has been the fastest growing online advertising format for six consecutive quarters – contributing a third of the overall increase in digital advertising revenue of 18 per cent – according to the report published in conjunction with the Association of Online Publishers.