What Facebook’s Latest Video Monetization Plans Mean for IP Owners

Every other month or so, Jukin Media’s Cameron Saless has a face-to-face meeting with his company’s Facebook partner manager where he asks about the social networking behemoth’s plans to monetize video content.

“They don’t give us too many updates,” said Saless, who’s the chief growth officer for Jukin, which licenses and distributes viral videos. “But they’ve been good about at least sitting down with us and getting a sense of what our frustrations are and where we see the opportunities. They’re definitely good listeners.”

On Wednesday, Facebook finally did a little talking, revealing that it would start running auto-play ads in between clips in users’ “suggested videos” feeds over the next several weeks. The owners of the posted clips will share 55% of the ad revenue with others featured in the feed, based on their portion of the overall watch time.

“It’s a massive opportunity,” Saless said. “We’ve been on YouTube for several years and built a massive footprint, but in the last year we’ve seen growth on Facebook even eclipse YouTube. I think, for our brands, we’re doing almost double the views on Facebook that we’re doing on YouTube today, which a lot of people don’t know.”

Higher CPMs

When it comes to video advertising, Facebook’s advantages over YouTube are two-fold, according to Peter Csathy, CEO of Manatt Digital Media, a division of the law firm Manatt, Phelps & Phillips, providing business consulting and legal services for the new media space.

“It has much deeper and more precise information about its base (than YouTube), which in turn logically leads to higher CPMs,” Csathy explained. Also the DNA of the platforms is fundamentally different, he pointed out. YouTube is primarily about personal entertainment and engagement, while Facebook is all about sharing, and that bodes well for the potential to build scale on the latter platform.

At the moment, it’s still mostly about what could be. Facebook’s “suggested videos” feature is currently available to just a few million users of its iPhone app, and during the test period the ads will run only with clips from a several dozen premium content partners, including Fox Sports, Funny or Die, Hearst, the NBA, Hearst and Tastemade. So people continue to keep their eyes peeled for the company’s next big reveal.

“The entertainment and media industries have been waiting to truly understand Facebook’s video monetization model,” says Paul Kontonis, president of the Global Online Video Association (GOVA), a non-profit trade organization representing the interests of top digital media companies including Collective Digital Studio, Kin Community, Fullscreen, Maker Studios and Mitu Networks. “All our companies have tested native video on Facebook and are bullish about the performance, but the business model side is limited. The auto-play with sound video ads that Facebook will be running in the ‘suggested video’ feed is a very small first step towards monetization. Yes, there is a 55/45 rev share similar to the standard YouTube rev share, but with Facebook the 55% is split between multiple creators, unlike YouTube.”

Big Talk

Facebook hasn’t been shy about boasting about its success with video. In a conference call with investors in May, company founder and CEO Mark Zuckerberg claimed that the platform got 4 billion video views a day in Q1 2015. YouTube said it reached the 4-billion-view-a-day benchmark back in 2012, and it has been sharing ad revenue with creators since way back in 2007. IP owners are also able to identify purloined clips and claim ad dollars they generate through YouTube’s Content ID system. The dichotomy has made the situation all the more frustrating for MCNs whose financial health is still largely dependent on social video ad revenue.

After an article in Fortune was published last month revealing the mushrooming popularity of Facebook video — including the fact that BuzzFeed’s video views on the platform had grown 80-fold in a year, reaching more than 500 million in April 2015 — Fullscreen CEO George Strompolos took to Twitter and vented his frustration in a series of tweets.

Good Things Come to Those Who Wait

Saless agreed that it’s frustrating to see content stolen, but he’s taking a patient approach.

“You can’t just build a video monetization platform overnight,” he said. “Facebook is massive. It’s global. There are billions of people on it. For now, it’s little bit of the Wild West over there because they don’t have the infrastructure in place, so I think a lot of people are on pins and needles. But when you see them starting to get more detailed about what their plans are, I think everybody’s very excited.”