It’s official.Facebook has declared war on YouTube, aiming its guns firmly at advertising’s fastest-growing segment – digital video.
Google’s YouTube is part of the furniture of the internet and, for many, it simply is online video. Its shadow over the digital ad market looms large, commanding a 31.8 per cent share of the market, data from eMarketer suggests. By comparison, Facebook snatches just a 5.8 per cent share.
According to eMarketer, YouTube is on track to generate $7.2 billion from global advertising in 2014. However, its switch towards quality content to attract more advertising has come at a price.
Traffic and content acquisition costs are believed to result in net ad revenues closer to $3.2 billion – around half of the total adspend directed at Facebook ($7.87 billion).
The battle will play out on two fronts. First, Facebook has a new way to serve ads, Atlas, that uses its data to run non-Facebook campaigns. Omnicom has already transferred its buying systems to Atlas.
Second, Facebook believes it truly understands millennial attitudes through its IQ research, and this means video.
The recent acquisition of the video ad network LiveRail will presumably give the social giant the ability to serve video ads through Atlas.
Meanwhile, Google’s new video ad format weaves its famous algorithm into YouTube to make sales more robust and reliable.
In the US, Google Preferred has run since April, and fourth-quarter ad bookings are reported to have already sold out. Google Preferred launched in the UK last week.
However, in terms of user numbers, comScore’s recent US figures showed Facebook coming in ahead of YouTube by one million views.
Add to the mix new analysis from Socialbakers that found Facebook is closing the gap on YouTube as a video distributor.
Drawing on more than 180,000 Facebook video posts across 20,000 pages, Socialbakers forecasts Facebook will surpass YouTube in terms of share of video interactions for the first time by the end of the year.
With online video tipped to remain the fastest-growing part of the ad market in the next few years, there is much to play for.
Take part in our poll...
NO Andy Way, head of social, MediaCom Beyond Advertising
"Not in the foreseeable future. Facebook is a connections network that happens to carry video; YouTube is a pure-play video platform with a good search engine. Which is not to say YouTube can’t improve its ability to serve content."
NO Oisin Lunny, senior market development manager, OpenMarket
"Not likely. Facebook is increasingly seen by teens and millenials as ‘club over 30’. In contrast, YouTube already has a massive global user base from the same demographic, who use it as a hub for much of their entertainment."
YES Adam Clarkson, global business director, Hollerf
"Facebook’s ten billion Ice Bucket Challenge views prove virality is at home on the platform. The potential of an assault on YouTube’s synonymy with video will be fulfilled as long as social purpose is leveraged during content creation."
YES Stefan Bardega, chief digital officer, ZenithOptimedia
"Facebook will challenge YouTube on format and targeting. It is reinventing the video format in the same way it reinvented the display format. It will bring new forms of targeting around TV programmes that will help advertisers extend TV reach."