Facebook Looks To Generate More Revenues With "Mid Roll" Ads

Per media reports, Facebook, Inc. FB is testing a new ad platform – mid roll format – whereby publishers will be able to put in ads in a video (which has a minimum duration of 90 seconds) after a user has played it for 20 seconds or more.

Reports add that Facebook will share revenues with publishers in a 45:55 ratio, similar to that of Alphabet’s GOOGL YouTube.

The move will allow publishers to earn money, Recode pointed out. Per Recode, ever since Facebook has opted out of pre-roll ads, most publishers haven’t been able to earn money from their videos on the social networking platform. Plus, it has kept sports publishers from running “valuable content” on the platform. With the new format, Facebook is “telling publishers that in order to make money, they need to make clips that go on for a while and keep users’ attention,” adds Recode.

Facebook, Inc. Price



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Last year, Facebook started to promote “Live” big time, to boost its top line by capitalizing on ever-increasing video viewing on social media platforms. During its last earnings call, Facebook stated that since May 2016, the number of live video has increased by four folds. Earlier, the company had expanded the access to Facebook Live (its live video format) to all users and not just celebrities, in addition to adding a plethora of new features.  These include enabling broadcast for a Group or Event and allowing audience to respond to live broadcast in real time through Live Reactions (same as in the news feed Reactions).

It also signed deals with media houses and internet celebrities to churn more content for its live platform. Online video is the most lucrative component of digital advertising as video ads generate more revenues than photo and text-based alternatives. This justifies Facebook’s interest in video ads. Ad revenues are the mainstay of Facebook’s revenues with over 95% contribution.

Given the phenomenal growth in mobile ad business and video efforts, Facebook has vastly outperformed the broader market. In the past one year, Facebook’s shares have generated a return of 28.09%, compared with the Zacks Internet Services’ industry’s gain of 11.46%.

At present, Facebook has a Zacks Rank #3 (Hold).A couple of better-ranked stocks in the wider technology space include Veeva Systems Inc. VEEV and MeetMe, Inc. MEET. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the trailing four quarters, Veeva Systems and MeetMe have yielded positive average earnings surprises of 47.77% and 36.07%, respectively.

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