… And then there were two: Facebook is nipping at YouTube’s heels.

Facebook “grows up great” to challenge YouTube for video supremacy online.

FB vs YTOnly few years ago, YouTube was pretty much the only game in town when it came to online video.  And Facebook wasn’t even in the picture.

Today, the online video landscape looks far different.

In fact, Facebook is on track to deliver more than two-thirds as many video views as YouTube this year.  And both services have a comparable number of monthly users overall.

Recently, market forecasting firm Ampere Analysis surveyed ~10,000 consumers in North America and Europe.  Approximately 15% of them had watched at least one video clip on Facebook within the past month.

While Facebook hasn’t exactly caught up with YouTube, its rise has been pretty stunning — especially when you consider the massive head-start YouTube had.  More than five years, in fact, which is a lifetime in the cyberworld.

Undoubtedly, one reason for Facebook’s success in video is its “autoplay” feature which snags viewers who might otherwise scroll by video postings.  Facebook reports that it has experienced a ~10% increase in engagement as a result of adding this functionality.

And there’s another big advantage for advertisers that Facebook possesses.  Since its viewers are always logged in, Facebook has the potential to collect far more demographic and behavioral data on its viewers that advertisers can tap into to target specific demographics.

For now at least, Facebook doesn’t offer the option for ads to run before video clips begin playing (the ads appear after the content).  Also, Facebook’s ad charges kick in after just three seconds of the ad being shown, compared to YouTube which sets the bar higher for ad charges to take effect.

[Incidentally, Twitter has the same 3-second policy as Facebook, whereas Hulu charges only for ads viewed all the way through.]

Another difference is that Facebook charges for every ad view, so if a viewer watches a video twice — even if it’s the same video in the same viewer session — Facebook counts it as two views.  On YouTube, that would be considered one view, regardless of how many times the video is watched.

Of course, these kinds of differences can be adjusted — and there’s no reason to think that Facebook won’t do just that if it determines that making those changes are in their best business interest.

Besides, advertising rates are already similar between the two platforms, which suggests that advertisers have come to place a high value on Facebook’s robust audience targeting.

Autoplay features have raised some questions as to what constitutes a true video “view.”  If video ads are being autoplayed, views are easier to get, but are they worthwhile?  Also, the fact that autoplay videos are running without sound until such time as the viewer chooses to engage is causing some advertisers to create content that “make sense” even on mute.

But the bottom line on Facebook’s foray into video seems to be that the demographic and psychographic audience targeting Facebook can deliver is of important value to advertisers.

Add the fact that YouTube is no longer the only major online video platform, and it’s easy to see how significant competition from Facebook risks the loss of advertising dollars for YouTube, along with damaging YouTube’s growth prospects over time.

This is getting interesting …

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