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How Will Facebook Make Money Off Live Video? Just Look at TV.
Publishers are waiting patiently ... for now.
By Kurt WagnerApr 18, 2016, 10:37am EDT
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Thinkstock / Artur Marciniec
In just two short months, Facebook has fully committed to live video broadcasting. And it has lured the Internet’s biggest digital publishers to tag along for the ride.
The incentive for publishers to create live video for Facebook has come in two forms: The promise of actual money — Facebook is paying some of these publishers (including Vox Media, which owns this website) to create live video broadcasts — and the idea of potentially more money, which will presumably materialize once Facebook decides how to derive a profit from live broadcasts.
Facebook has yet to announce a long-term ad strategy for live video, and publishers say the company is preaching patience while it figures out a game plan.
But publishers need a solution sooner.
“It’s tough for us to be patient because in the end all of these [broadcast windows] need dedicated resources,” said Mark Lopez, executive vice president of Univision Digital, which is using Facebook Live for a number of properties including Fusion. “If we use resources for Facebook Live that means those resources are not working on something else. So for us it’s pretty urgent that we can find paths to monetization.”
So what’s the play here, Facebook?
Most of the publishers we spoke with at Facebook’s developer conference last week expect Facebook to roll out some kind of interstitial, mid-broadcast video ad. That is, a stoppage in the action to listen to a word from our sponsors versus a pre-roll ad that may deter people from watching altogether.
That mid-stream ad strategy should sound familiar to you. It’s the same business model that has powered TV for decades.
Facebook has been encouraging publishers to broadcast longer videos — as long as 10 minutes or more — which makes sense if mid-broadcast ads are on the table. Putting a 30-second video ad in a two minute broadcast won’t keep people hooked. But a 30-second ad to finish a 10 or 15 minute broadcast you’re already invested in? Sure, why not!
It’s possible that Facebook will try other revenue tactics beyond advertising — a subscription, perhaps? — but TV-like ads seem to be the most reasonable option for now.
Facebook has long argued to TV advertisers that it would be a great place to spend their money. It even launched a new API last week so that publishers can use existing, high-quality video equipment to produce broadcasts for Facebook. Advertisers want to align with high-quality content, which Facebook is fighting for.
The company does have one temporary fix in place: It green-lighted branded content in News Feed, a type of native ad that gives publishers a chance to make additional money on the side while they focus on live video.
But none of those eyeballs mean much if they don’t lead to actual advertising revenue. And video publishers are eager to see some return from their efforts.
This article originally appeared on Recode.net.
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