Facebook Video Ads: Boon or Bane for Retailers and Consumers?

Facebook is taking another step toward monetizing its vast audience of plugged-in consumers with the planned introduction of paid video ads. As reported in numerous media outlets, Facebook intends to launch 15-second video ads that will play in a user’s newsfeed three times per day for as much $2.5 million per spot.

That approaches the $4 million cost of a 30-second TV ad during the Super Bowl earlier this year, although as other observers have pointed out Facebook’s global membership of 1.15 billion favorably compares with the billion viewers around the world regularly claimed (and sometimes disputed) for the Super Bowl.

So will Facebook video ads prove to be a boon or a bane for retailers and their customers? The answer may not be so clear cut.

As I wrote about in last week’s column, video is rapidly evolving into a separate channel for consumer engagement. Video is a natural fit in an ultra visual medium such as the Internet and has proven extremely popular with the public. Video ads offer retailers a natural way to bridge online and TV advertising campaigns. The price is expensive, but Facebook’s high user totals and engagement levels are undeniable.

Video ads will reportedly play silently until (and unless) users click on them and will not play more than three times a day. There is no compelling evidence that click-through rates on video ads will surpass generally anemic click-through rates on other types of online ads, although as always careful targeting can play an important role. Social media and the Internet are replacing TV to varying degrees for many consumers (especially advertiser-coveted Millennials), so the wisdom of blurring the line between Facebook and TV may be questionable.

And the verdict is…

No clear verdict here. Based on reported cost, obviously only larger retailers with deeper pockets will experiment with Facebook video ads, so to some extent if you can afford it, you can probably afford the risk. Moving beyond cost, it seems that Facebook video ads may prove most valuable for two dissimilar types of retailers – mass merchandisers and purveyors of specialized products that already heavily use social media marketing. Let me explain why.

Mass merchandisers have an audience that skews older and broader than most other retail niches and thus will likely be receptive to advertising that reminds them of promotions they receive in the traditional TV medium. Their customer base is also less likely to use social media for its “cool” capabilities and more likely to use it as one more way of obtaining information.

The other type of retailer I mentioned, let’s call them “hipster” retailers for lack of a better term, probably already knows a great deal about their Facebook fans and how to effectively target them. As a result, hipster retailers will be uniquely positioned to craft the right video content and send it to the right Facebook consumers at the right time.

Given the company’s overall track record, video ads will likely become a permanent part of the Facebook landscape once they are launched. But they may prove less effective than hoped and evolve into something very different than what they started as. Unless you are a retailer with a very large marketing budget or a tradition of social media innovation, you may want to let a few pioneers establish the proving ground for video ads on Facebook.

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