Facebook, Inc. FB has changed its ad pricing policy to make it more advertiser-friendly. This move is expected to deal with the persistent advertiser gripe that they were being charged for videos even when users were merely scrolling over them (Facebook auto-loads videos, so they start playing when this is done).
Now the company will only charge when the video is viewed for at least ten seconds. Earlier the company started charging as soon as three seconds were up.
According to reports, the revised pricing policy will likely lead to increased prices for placing ads on the social media platform, as Facebook sells the ads via electronic auctions.
Appropriate ad pricing is an issue in the digital ad industry as the metrics for gauging ad views have not been clearly defined yet.
However, marketing companies are tightening the regulations defining ad views. In fact, companies like WPP’s WPPGY GroupM, which controls a significant part of the global digital ads market ($105 billion out of total global ad spending of $145 billion), has set up it its own standards for purchasing ads. The company, which undertakes marketing management of companies like Unilever, Ford Motor and Dell, had announced that it expects to pay for video ads that are initiated by users (unlike autoplay), played with volume and when at least half of the ad has been viewed.
This attempt by Facebook, while not meeting such criteria, is still an improvement and is likely to be a positive signal for marketers. This is because the social media company has been witnessing a reasonable growth in engagement levels, user base and data-driven consumer insights. Moreover, Facebook is distinctly preferred by marketers before the launch of a product for creating brand awareness, which is likely to give the company an upper hand in the ad pricing process.
Also, the company is in talks with institutions like Media Rating Council (industry association to establish media measurement standards) and third-party companies like Nielsen in order to have improved metrics for gauging mobile video views.
Nonetheless, Facebook is likely to face stiff competition from its prime competitor, Google's GOOGL YouTube in the domain. YouTube TrueView tool allows its advertisers an option to pay once the whole ad has been seen. (Read: Is Facebook Poised to Beat YouTube as a Video Ad Platform?)
Additionally, other prominent players in the industry like Twitter, Inc. TWTR are adding to the concerns of this Zacks Rank #3 (Hold) company. The micro-blogging site recently unveiled its own video ad offering. It has also kept ad prices in tune with marketers demand, charging only when the video takes up all of a user’s screen and that too for at least three seconds.
The immense scope for growth in the online video ad market has made competition more stiff among the key players, all thriving to capture the bigger share of the pie.
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