Delightful headline-writing by The Verge. From the article:
Expected to launch in the summer, Facebook’s new video ad units may prove to be a revenue success for the company, but they may also become another nuisance for users. According to AdAge, Facebook is currently in talks with various agencies to secure its first video ad partners ahead of a June/July launch, with a view to displaying three video advertisements in users’ News Feeds each day.
AdAge reports that Facebook is currently selling four daily video ad slots, splitting demographics into four categories: women over 30, women under 30, men over 30, and men under 30. The ads are reportedly priced at around $1 million, suggesting that Facebook could make as much as $4 million a day — if all of its advertising inventory is purchased.
The rub, of course, is that no one wants video ads – or ads on their lock screen, for that matter. But Facebook has no choice: they are an advertising company, and for understandable reasons. Advertising is how consumer-centric web properties monetize.
Facebook is, famously, pivoting to mobile. As Shery’s Sandberg tells the BBC:
“To say that mobile is important to Facebook is the under-exaggeration of all time,” she told us. For the first time last quarter, users had spent more time with Facebook on their mobile phones than on the desktop.
She admitted that the company had been late to get its mobile operation right and had made plenty of mistakes. The firm got underway in 2004 just before the mobile internet revolution took off – Mr Zuckerberg has said if it had been a couple of years later, he would have started it as an app – and the transition over the past year had not been painless.
Here’s the million dollar question: if Facebook had started as an app, what would their business model be?
One of the advantages OTT messaging services have over Facebook on mobile is that their monetization strategies enhance the user experience; Facebook’s detracts. From my piece comparing Facebook to LINE:
LINE comes with a default pack of stickers, and the characters in that default pack are quickly becoming iconic in many Asian countries; however, you can buy new sticker packs for $1.99 using in-app purchase.
Advertising is tolerable on PC’s because there is screenspace to spare; not so on mobile. LINE’s monetization model enhances the the user experience (more stickers!); Facebook’s detracts. Moreover, the fact that LINE is a much smaller company means their revenue needs are much lower.
Facebook can pivot its product all it wants, but it is stuck with the advertising business model. Ultimately, they are in an arms race to provide features so compelling that users will put up with ever increasing irritation.