By Edmund Lee
(c) 2013, Bloomberg News.
Facebook, seeking to break the long-held dominance of television over advertising budgets, plans to sell TV-style commercials on its site for as much as $2.5 million a day, two people familiar with the matter said.
The world’s largest social-networking site, which has 1.15 billion members, expects to start offering 15-second spots to advertisers later this year, according to the people, who asked not to be named because the plans aren’t public.
The move would follow efforts by Facebook’s online rivals to capture ad dollars that have traditionally gone to TV networks. Google began funding original content channels on its YouTube video-sharing site in recent years, giving it a more curated venue for commercials. A year ago, AOL started HuffPost Live, a CNN-like video stream running five days a week.
With Facebook, the idea would be to capitalize on the millions of users who actively check the site on a daily basis, including during the prime-time hours coveted by television advertisers. As of last quarter, 61 percent of Facebook members were using the site daily, a number that has risen despite management predictions that it would decline.
“Every night, 88 million to 100 million people are actively using Facebook during prime-time TV hours in the United States alone,” Chief Operating Officer Sheryl Sandberg said last week on a conference call to discuss second-quarter results.
Elisabeth Diana, a spokeswoman for Menlo Park, Calif.- based Facebook, declined to comment on its advertising plan.
While the social network already allows advertisers to upload videos to their Facebook page and then broadcast them into a user’s news feed, the new service would let marketers buy their way directly into a person’s feed with a 15-second pitch, according to the people. That’s typically the minimum length of a television commercial.
The commercials will initially be sold on a full-day basis and can only be targeted to users based on age and gender, according to the people. Facebook members won’t see a spot more than three times in a given day, the people said. Depending on how large an audience an advertiser plans to reach, the ads will range in price from $1 million to about $2.5 million a day, according to the people.
Chief Executive Officer Mark Zuckerberg, who has been working with global marketing head Carolyn Everson on the video ad service, pushed back the start date at least twice, wanting to make sure Facebook’s user experience won’t be tainted by the ads, according to the people. Zuckerberg wants high-definition video and easy-to-use playback features, the people said.
Even with the growth of Internet traffic, television remains the undisputed king of the ad world. Advertisers plan to spend almost twice as much on television as on digital media this year, according to ZenithOptimedia, a research unit of Publicis Groupe SA. Internet ads are expected to reach $36.2 billion, or 22 percent of all media purchases, while TV advertising will garner $63.9 billion, or 38 percent.
Facebook’s move also would step up competition with social- networking rival Twitter, which has been courting TV advertisers in its bid to reach $1 billion in sales by 2014. The microblogging site earlier this month expanded a service that markets direct promotions to viewers who tweet about shows they’re watching on television.
Nielsen, the dominant firm for measuring TV ratings, started working with Facebook three years ago on an effort to count Internet viewership the same way it does with television. Nielsen relies on Facebook’s user data to create ratings measurements for online content, whether it’s an ad or a TV show streamed over the Internet.
Silicon Valley companies have had difficulty luring away ad dollars from television networks because of a lack of a single measurement system that compares TV audiences directly to Internet audiences. Figures from measurement companies such as ComScore Inc. are difficult to compare against ratings from Nielsen.
Facebook sees the Nielsen partnership as a boon in its effort to sell more video advertising, an executive familiar with the plans said. Advertisers will be willing to spend more if they’re able to present comparable Nielsen ratings figures, the person said.
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