Facebook is looking forward to good times ahead. Its premium video platform, which it launched in the past year could fetch the company billions of dollars in the coming years. According to Nomura, the Wall Street research firm, Facebook’s video platform could earn the company a whopping $3.8 billion in ad revenue by 2017.
Anthony DiClemente, a Nomura analyst notes that Facebook could increase video sales by simply “cannibalizing” other revenue outlets. As a matter of fact, Nomura predicts that Facebook will triple its video ad revenue in 2015. It is estimated that the videos will cost around $22-28CPM [cost per thousand views].
Facebook is unlikely to topple YouTube as the king of video despite the impressive projections. Google’s video platform is expected to double its ad revenue every year hitting $8.5 billion in 2017. Last year, YouTube made $4.1 billion in ad revenues. Despite this, the platform struggled to make a profit due to escalating expenses. One strategy YouTube could use is to expand its demographic from tweens and teens, in order to attract more advertisers.
Facebook and YouTube are however not the only players in web videos, the two had a combined market share of 34%, which is expected to reach 36% by 2017. “In our view, Facebook and YouTube will likely be the largest players in online video, providing differentiated offerings with respect to pricing, targeting, and engagement,” stated DiClemente.
The different features of the two companies will no doubt impact advertiser’s choice. While Facebook is able to furnish advertisers with user’s data, the user must be logged to view the ad. YouTube videos are likely to have higher completion rates as the viewer is already prepared to watch the content compared to Facebook’s sound less auto play videos. In all it is unlikely that advertisers will get the same ROI from other platforms despite the fact that Twitter and Snapchat are coming up strong.