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Facebook is going to start showing ads in the middle of its videos and sharing the money with publishers

Facebook wants to show more ads to people who watch its videos and start making money for the people who supply it with those videos.

Industry sources say the social network is going to start testing a new “mid-roll” ad format, which will give video publishers the chance to insert ads into their clips after people have watched them for at least 20 seconds.

For now, Facebook will sell the ads and share the revenue with publishers, giving them 55 percent of all sales. That’s the same split offered by YouTube, which dominates the online video ad business.

If the new ads take off, they could represent the first chance many video publishers have had to make real money from the stuff they’ve been running on Facebook.

Facebook began moving aggressively to show videos to its users a couple of years ago, and by 2016 said those users were watching 100 million hours per day. But unlike almost everyone else in the ad business, CEO Mark Zuckerberg has forbidden “pre-roll” video ads, which run before a clip starts.

That means that most publishers have seen little or no ad revenue from the clips they show on Facebook, even though many are spending considerable resources trying to build up a video presence there. That stance has also discouraged some Facebook publishers, like sports leagues, from putting valuable content on the network.

Last year, Facebook started allowing publishers to create videos sponsored by advertisers, which has allowed some publishers — most notably Buzzfeed’s Tasty unit — to generate significant ad dollars. Sources say that decision came after BuzzFeed executives complained to Facebook executives that they weren’t making enough money from Facebook video.

Facebook has also tried other experiments to create advertising opportunities for publishers. In 2015, it created a separate video section and allowed some publishers to share revenue from standalone video ads it ran there. Last year, it also began testing mid-roll ads in live videos.

The plan Facebook is trying now could have the biggest impact, since it includes all kinds of videos throughout the network — most crucially in the News Feed, its primary distribution mechanism.

A Facebook rep declined to comment. But last fall, Facebook VP Dan Rose, who runs the company’s content operations, said that he expected to talk about expanding the mid-roll ads it was trying in live videos to more video formats “early next year.”

The parameters of the new ads also suggest that Facebook is placing more importance on the time people spend watching videos, rather than the total number of videos they watch.

Up until now, Facebook has defined a “video view” as any time a user watches a clip for a minimum of three seconds. That’s been a source of controversy in the media business, especially since Facebook automatically plays videos when they show up in users’ feeds.

But the new Facebook ads can only run once a viewer has watched a clip for at least 20 seconds. And they can also only appear in videos that run for at least 90 seconds. In other words, Facebook is telling publishers that in order to make money, they need to make clips that go on for a while and keep users’ attention.

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And Finally....

Will Snapchat IPO Set Stage For Stampede Of Unicorns?

It's been a long time coming, but an initial public offering from one of the fastest-galloping unicorns is expected in early 2017, and some observers expect it could lead to a stampede of big-name debuts.

The star unicorn IPO is coming from Snapchat owner Snap. It's arguably the most anticipated IPO since Facebook (FB) had its blockbuster debut in June 2012, and could be the biggest since China's Alibaba (BABA) raised a global record $25 billion with its September 2014 IPO.

Snapchat is among the biggest unicorns, a name given to privately held companies valued at $1 billion or more. And it's no pony. Based on its last investment round, Snap has a market valuation of a whopping $18 billion. And it's become a major competitor for social networking leader Facebook and its Instagram video- and photo-sharing site. Facebook has added features to Instagram to take on the Snapchat challenge. In 2013 it was widely reported that Snapchat turned down a $3 billion buyout offer from Facebook.

Other possible unicorns coming to the stock market soon are Spotify and Pinterest, though perhaps not yet the two biggest unicorns, Uber or Airbnb.

After 2016 proved to be the slowest IPO year since the Great Recession, investors hope to lasso their share of unicorns in 2017.

Contact Socially Tuned today to find out how our expertise and contacts can give you the competitive advantage that will propel your business to success.