Facebook’s mid-roll video ad breaks are beginning to show signs of life, though publishers still need a high volume of views and engagement to generate meaningful revenue from the ad product.
Launched last March, the ad breaks program lets publishers make money by serving video ads inside videos that are at least three minutes long and with the ad not showing up until after the first minute. Along with Facebook Watch, the program is Facebook’s attempt to help publishers and other video makers monetize their video, especially after previous failed attempts such as Suggested Videos. While the mid-roll ad breaks are closer to the products found on YouTube and other long-form video platforms, the program was delivering scant revenue to publishers in 2017. That seems to be changing.
Six publishers participating in the ad breaks program said they are seeing more revenue come in from the ad product this year. One publisher said its mid-roll ad revenue grew by 10-40 percent depending on the page from the first quarter to the second quarter of 2018, and is on track to make more than $10 million from the mid-rolls this year. A second publisher said Facebook mid-rolls are on pace to be a “double-digit-million-dollar business” for the publisher this year. A third publisher said their Facebook mid-roll ad revenue will be in the low seven figures in 2018. All three of these publishers are among the top Facebook video makers in terms of monthly video views.
“We’re seeing checks consistently in the six figures on a monthly basis now, so in the grand scheme of things, it’s a good progression from where we were last fall,” said an executive from the third publisher. “But it’s still not a huge leap; considering where our video views are at, it’s still not at the level you’d imagine it should be.”
Facebook’s ad breaks program is still a volume and engagement game, sources said. After crunching some numbers internally, one top video publisher on Facebook estimated that on one of their Facebook video pages, they made $360 from every million video views during the most recent quarter. Another publisher projected that it makes $264 for every million views.
Facebook declined to comment on the record.
Comparisons to YouTube
Publishers gave mixed responses when asked how Facebook’s mid-rolls compare to those on YouTube or other platforms. USA Today Network, for instance, recently said that Facebook was its biggest platform in terms of social video revenue, largely driven by its success with its feel-good “Kind” video series.
“Facebook is definitely the leader in terms of volume and revenue,” said Michael Kuntz, president of national sales and brand partnerships for USA Today Network. “YouTube’s a great partner as well, but we haven’t gotten the same tonnage there just yet as we have gotten on Facebook.”
Others that have more experience with YouTube see more revenue from Google’s video giant. The publisher that projected $264 for every million video views on Facebook said it expects $2,200 for every million video views on YouTube. For them, a Facebook video view is essentially worth 12 percent of a view on YouTube.
Of course, the comparison between Facebook mid-rolls and YouTube pre-rolls is limited given Watch is still nascent and user behavior there is still forming. “YouTube is a 5-year-old business for us, and a 12-year-old business in and of itself,” said Ken Blom, vp of branded distribution for BuzzFeed. “The Facebook Watch business is still at the ground stage. We’re still talking about a new user behavior for Facebook. The monetization is not going to be there until the behavior is.”
It’s still a long game
There are some promising signs for more ad revenue on the horizon. At VidCon, Facebook announced that it would expand mid-roll eligibility to video creators and more pages in the U.S. The time spent inside Watch has also increased by 900 percent since the beginning of the year, according to Facebook, which hasn’t said what its overall watch time is.
Facebook is also letting some top publishers directly sell their own mid-roll inventory, though these publishers can’t sell ad slots inside individual shows yet, sources said. Other publishers said they’re close to being able to do the same. Facebook also continues to test pre-roll ads within Watch (one publisher said Facebook elects to run a pre-roll unit when a user actively searches for a show or a video on the platform).
Sources expect the ad breaks product to remain a slow burn for both Facebook and publishers in the program. Sources said Facebook is still cautious in terms of how often it delivers an ad inside an eligible video. Based on its internal numbers, one publisher estimated that Facebook is only serving ads inside one out of every three video views that are eligible for an ad break.
“TV has four minutes of ad time for every 11 minutes of content; Facebook Watch has a fraction of a fraction of that,” said an exec at a top Facebook video publisher. “They’re going to expand the ad load, but in the short term, they’re inching into it so they don’t piss off users and create scarcity for the inventory as it opens up.”
Advertisers are also able to make direct buys for mid-rolls now, ad buyers said. One ad executive said that Facebook’s mid-roll units had a $5 CPM (based on a 10-second view) during a consumer-facing campaign it ran during the first and second quarter of 2018. For a business-to-business campaign during the same time period, the ad buyer paid an $18 CPM. YouTube’s CPMs are between $15 and $20 for this advertiser: “a little higher than Facebook, but in my opinion, YouTube’s a far superior video product,” the buyer said.
Advertisers are still waiting for Facebook to deliver benchmarks for a successful use of Facebook ad breaks.
“We’ve been testing [mid-rolls], but you can’t dump boatloads of money into it until you get better measurement and benchmarks figured out,” said Paul Dolan, CEO of Varick Media Management. “That would get Facebook even closer to what we see with pre-rolls on YouTube and other platforms.”
The market remains volatile
For publishers trying to make money with Facebook mid-rolls, it’s still a volume game and the platform remains volatile as some videos can capture tens of millions of views and along with it, a decent amount of revenue — while others bring in pennies.
“Volume is the game,” said a publishing exec. “The people that are winning are the same old millennial brands that milked Facebook early.”
“I don’t think the revenue numbers are going to skyrocket over the next 12 months,” said another. “Some months you can hit it out of the park, and some months it performs differently; I think that’s a reflection of them trying to figure out [a video and advertising] product and how it best fits into the market. They have to build something sustainable where people consistently consume video, versus occasionally lucking into a hit.”
For big publishers that can consistently capture billions of views on the platform, the return on revenue is noticeable, if not as meaningful as they’d like it to be. For some, the real prize is still in getting Facebook to share revenue that Facebook makes from the news feed. (BuzzFeed CEO Jonah Peretti, who said Tasty has made zero dollars with Facebook’s ad products, has been at the forefront of this argument.)
Said another publishing exec: “When do they share revenue that’s between videos that happens as a result of the engagement being created by publishers like us? Most of the ad revenue on Facebook is not within the video but between them.”