At the beginning of this year, Facebook Inc (NASDAQ:FB) had made it clear that the company will focus on generating revenue from video advertising. Soon social networks like Twitter Inc (NYSE:TWTR) decided to steer in the same direction. As it turns out, video advertising will play the key role in the yearly revenue of these social networks.
Facebook Inc (NASDAQ:FB) has been testing video ads feature for past few years and it is good to go as of now. The company had held meetings with major industries about the participation in its video advertising program. Some of the big brands like McDonald’s, Ford, Lionsgate and Nestle are already showing video ads on this social network. Compared to text ads, video ads are more beneficial for the company and advertisers alike. The number of users watching videos on their mobile is increasing day by day.
According to the recent data, nearly 4 billion videos are watched on the social network per day. Surprisingly, 75% of those views are from mobile devices. Consequently, the company has encouraged its advertisers to focus on mobile ads.
In addition to the larger audience that can be targeted, video ads tend to be more engaging. As a result the advertising costs are as much as 10 times more compared to banner ads. This form of video advertising rivals those on television networks. However, the increased user engagement on the social networks has attracted many advertisers. Twitter Inc (NYSE:TWTR), known for the real time conversations among users that creates buzz in the social media, is also experimenting with video advertising.
It is estimated that by the end of this year, these companies will have a large revenue share from video ads.
It is still to be seen how these social networks use this opportunity. As of this moment, these companies have much to learn from YouTube, the online video giant that has taken video advertising to new levels. One thing is clear now, video advertising will not be a monopoly of television networks. The online giants are ready to take on the competition.