This Number In Facebook's Q3 Earnings Should Scare TV Networks

Eight billion.

That's how many videos people watch on Facebook every day, according to company comments after it reported third-quarter earnings today--and it's double the number just seven months ago. More than anything--Facebook's 45% ad revenue growth notwithstanding--that's why companies that make their money on television advertising should be worried.

Granted, it's easy to put too much stock into even a figure as eye-popping as 8 billion a day. Facebook counts any videos watched for as little as three seconds. And nearly all those videos are nothing like television shows or movies. Instead, they're short videos of your child's first steps along with trailers for actual shows and movies. So this is not yet prime-time advertising as brand marketers think of it.

But what the 8 billion daily video views shows is that Facebook has arrived as a place where people are happy to watch videos of almost any kind--some 500 million people daily, in fact. Not only that, they're doing so on the mobile devices where advertisers know they need to reach people--especially the younger people with disposable income--who have begun drifting away from linear television.

CEO Mark Zuckerberg is also driving the company to make video easier to upload, watch, and make money from. It has added live video to its Mentions app for public figures, started supporting 360-degree videos in the news feed, and begun testing a dedicated videos section. "Over the next few years video is going to be the most engaging content online, and by continuing to innovate here we have a chance to build the best place to watch and share video," Zuckerberg said in prepared comments on its quarterly conference call today.

What that means is that people on Facebook will now view video ads, the most lucrative kind of ad online or off, as a natural if not universally loved complement to the videos they're already watching. At some point, ad spending on television--still the largest single place for marketers' budgets--seems bound to shift at least in part to video ads. Facebook event recently debuted a measurement it calls Target Rating Point to provide a similar metric for buying video ads on Facebook the same way as on TV.

For the time being, advertisers are using video ads on Facebook to complement their TV brand campaigns. Chief Operating Officer Sheryl Sandberg noted one example: GMC used video and other ads on Facebook to extend the reach of their TV ads for trucks and SUVs. According to Sandberg, the Facebook campaign lifted ad recall by 13 percentage points and brand favorability by six points.

The big hole in Facebook's video ad strategy, of course, is compelling long-form content such as movies and TV shows. It's a long way from getting that, and it hasn't indicated how it intends to get studios and other content creators to go along. But it recently has offered a business model for it, which is a share of revenue from videos it hosts, like it just started to do for publishers with its Instant Articles.

Facebook also needs to provide a better way for people to find video they want to watch. It's trying out Suggested Videos to surface videos people are likely to want to watch, but it will need more than that to rival YouTube, Netflix, Hulu, Amazon, and many others.


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