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Facebook to Sell TV-Style Ads

7 Aug, 2013 By: Doug McPherson

MENLO PARK, Calif. – Facebook plans to sell TV-style 15-second commercials on its site this year for as much as $2.5 million per day, according to reports from Bloomberg News.

The ads will be sold on a full-day basis and can only be targeted to users based on age and gender. That differs from how ad units are sold on Facebook now, which lets marketers target ads based on location and areas of interest – data points that television networks generally don’t offer.

The sources told Bloomberg that by relying on fewer categories, Facebook would be copying the way TV ads are bought, an attempt to make the process more comfortable for executives accustomed to TV. Facebook users won’t see an ad more than three times in a day. The ads will range in price from $1 million to about $2.5 million a day, depending on audience size.

During second-quarter 2013, 61 percent of Facebook members were using the site daily – a number that has risen despite predictions that it would decline. “Every night, 88 million to 100 million people are actively using Facebook during prime-time TV hours in the United States alone,” Chief Operating Officer Sheryl Sandberg said last week on a conference call.

Sources who told Bloomberg of the video ads asked not to be named because the plans aren’t public. The move would add Facebook to a growing number of companies seeking ad dollars that have traditionally gone to TV networks. Google is now funding original content channels on its YouTube video-sharing site, opening the door for commercials. And, last year, AOL started HuffPost Live, a CNN-like video stream running five days a week.

Reportedly, CEO Mark Zuckerberg, who has been working with global marketing head Carolyn Everson on the video ad service, delayed the start of the ads to ensure Facebook’s user experience wouldn’t be hurt. Zuckerberg wants high-definition video and easy-to-use playback features.

Ad Age reported last month that Facebook had pushed back plans to launch video advertising until early fall at the soonest. The company has only said it’s exploring building on its existing offering that allows marketers to add video to page post ads.

So far, TV is still doing fine. Advertisers plan to spend almost twice as much on TV as on digital media this year, according to ZenithOptimedia. Internet ads are expected to reach $36.2 billion, or 22 percent of all media purchases, while TV ads will garner $63.9 billion, or 38 percent.

But still, in a separate report, Nielsen found that Facebook attracts more 18-to-24-year-old people during prime-time viewing hours than any of four major television networks. Those Nielsen findings add, “Facebook can contribute significant incremental or duplicated reach to that of the TV networks, especially among younger viewers.”

But Brian Wieser an influential Wall Street analyst and executive at Pivotal Research Group, has blasted the idea that Facebook’s video ad offering rivals the reach and market value of network TV. Wieser described the Nielsen report as a “selective way of looking at the industry,” and implied it had little practical application in terms of the way that advertisers and agencies buy media.

“Highlighting Facebook's dominant reach vs. individual networks during daytime wrongly implies that time-of-day is a first cut against which budgets are set,” Wieser said. “Perhaps they should be, but workflows associated with media buying dictate that the first cut of planning for large marketers is by medium. Digital media is separate from TV in this regard for many reasons: workflows are different, and lean-forward vs. lean-back environments mean they are generally viewed as different environments; how a budget is justified and how impressions are measured at the present time are generally different, too.”

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