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Jul 29 2015

As Mobile Video Ads Soar At Facebook, Big Brands Pile In

 

By Robert Hof

 

 


Facebook’s second-quarter results today didn’t thrill investors, who knocked shares down more than 3% in after-hours trading. They don’t like to hear about an 82% jump in expenses to get revenue growth of half that much–even less so when Mark Zuckerberg, CEO and founder of the social network, says that spending won’t slow down much anytime soon.

 

But advertisers were a different story–in particular, big brand advertisers like Procter & Gamble PG -3.99% and Under Armour UA +0.51% that are looking to reach people via the mobile devices they carry with them all the time. Mobile ad revenues shot up 74% from a year ago, considerably faster than ads overall, which rose 55% after taking out currency impacts, and it’s now 76% of ad revenue.

 

In particular, Facebook is starting to become a must-buy for big brands that still spend the most on television, because it has the reach and the impact they want. Now, according to ad agency executives, they think Facebook is finally poised to capture more TV ad dollars that Chief Operating Officer Sheryl Sandberg has spent years pursuing.“We see Facebook at a core pivot point,” says David Hewitt, VP and mobile lead at the digital agency SapientNitro. “It’s now a safe bet to put a lot of money into.”

 

In the last six to eight months, he says, brands have started to understand the reach Facebook has among smartphone users–some 844 million people each day. “It’s hard to get reach on mobile,” he says, but now “Facebook checks that box” in a way that few others online besides Google can.

 

Another reason is that Facebook can run those ads in a lot of places besides just Facebook. Now that the company is operating a number of other distinct apps, such as Instagram, WhatsApp, and its own Messenger app, advertisers have a wider choice of places to reach a broader range of audiences in unique ways. It also can run Facebook ads on other sites that are part of its Audience Network.

 

Not least, advertisers like what Facebook is doing with video. In video ads that play automatically in people’s central news feeds, they have a format they know people watch (and that commands much higher prices for Facebook). “There’s an amazing amount of upside to video,” says Hewitt, enough to overcome what he calls “muscle-memory media buying” by big brands. Already, a few brands are crafting campaigns. At the Cannes Lions festival last month, Sandberg noted, some of the winners included Under Armour’s “I will what I want” created with the agency Droga5 and Procter and Gamble’s “Like a Girl” created with Leo Burnett.

 

What’s more, Facebook is pitching advertisers on the ability to buy ads using the same measures they use for TV ads, according to a recent report. Indeed, the ability to measure the impact of its ads on product sales is another big reason Facebook has attracted advertising’s biggest spenders. One example Sandberg cited: Acura used Facebook video to launch the TLX, then showed “retargeting” ads when people who saw the video went elsewhere online. Using a Facebook service called Conversion Lift, she said, Acura could prove the ads drove car sales.

 

For now, image advertising like on television is still likely a small part of spending on Facebook. Let’s not forget that a large chunk of Facebook’s mobile ad revenues still come from app install ads, which prompt people to download an app–more of a classic direct-response ad than the image ads brands favor on television and other media. But even app install ads are attracting big brands such as HBO too, according to Sandberg.

 

Facebook isn’t alone in its pursuit of brand advertisers. “Google, for example, is rapidly building out audience targeting options, and has a ‘little’ video network of its own—YouTube—that is massively successful for advertisers and very effective on mobile,” says Craig Palli, chief strategy officer at the mobile marketing technology firm Fiksu.

 

So far, though, Facebook appears to be more than holding its own.

 

 


Originally published on Forbes

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