Facebook Live Tests Mid-Roll Ads as Potential Revenue Model

After hinting for months that it might introduce commercial breaks inside live video streams, Facebook has started testing this concept with some of its top publishers. This marks the first time the company has served ads directly from inside videos, and follows on the heels of its new policy of paying some publishers and digital influencers to post video. The payments provide a financial incentive to post on Facebook since the platform so far lacks an advertising model that could generate shared revenue.

Advertising Age reports that Facebook has always “been reluctant to run pre-roll ads,” due to chief executive Mark Zuckerberg’s belief that they “ruin the viewing experience.” The new mid-roll ads run as long as 15 seconds and can appear five minutes into a video.

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Video ads are “drawn from among promoted video campaigns already running on the platform,” but “some brands could opt out” of having their ads run during live video. Facebook is not sharing ad revenue during this test period.

“We wanted to opt out immediately, because there was no reporting on how well it does and you don’t have control over where the commercial shows up,” said one agency executive. Because media companies cover breaking news, some brands are concerned their ads will play during a tragedy. For example, Facebook Live played a role hosting videos “during police shootings last month, setting off mass protests.”

Not all live videos depict dire events; the video of a woman laughing hysterically while she tried on a Chewbacca mask was seen 160 million times. Publishers can also “turn off” ads if the video shows any “sensitive subjects.”

According to Ad Age, “YouTube basically invented the model of splitting ad revenue from pre- and mid-roll ads with content creators to motivate their sharing on the platform.” Facebook has one model whereby it “places promoted video posts among suggested videos, and it splits the ad revenue,” but this model “has not made too many publishers rich, because they wind up making fractions of a penny per video view.”

Another Facebook feature would allow the platform to “serve different ads to different viewers watching the same live broadcast.” But Facebook Live, say media partners, is “inconsistent in terms of how many viewers they can guarantee.”

“It’s hit or miss,” said one publisher. “We know it takes time to figure out what works, and that’s why Facebook is paying people to experiment before the results are fully in.”

At 22squared, executive Chris Tuff says that Facebook Live “could become a legitimate advertising channel if brands build fresh creative commercials for it.” He points to a behind-the-scenes look of the new “Fast and Furious” that actor Vin Diesel streamed. “Vin Diesel just hit 100 million followers, which is crazy, so imagine they run mid-roll ads for the film he’s starring in,” says Tuff. “It makes perfect sense.”