If Morgan Stanley Is Right, Facebook Has to Implement Video Ads

facebook video adThere has been a lot of buzz in recent weeks about the possibility of Facebook adding video ads to its site. They very recently unleashed graph search on all users, but people knew this was coming for months, and it doesn’t appear that it’s going to drive their revenues up a great deal. If, or should I say when, Facebook decides to add video to its advertising options, revenues are going to take off. Morgan Stanley has a new report out that makes quite the convincing case that video ads should be a priority for Facebook.

$1 Billion in 2014 from Video Ads

Analysts at Morgan Stanley decided to take a look at the potential for video ads in Facebook. According to Peter Kafka at All Things D, these analysts “think the ads will be an instant hit, and could end up generating $1 billion for the company next year.” While that’s only one percent of the funds devoted to TV advertising, it’s quite a chunk of change.

More importantly, Morgan Stanley analysts also predict that by 2019, these video ads will be generating around $5.5 billion each year for Facebook. I have a feeling Zuckerberg and others at Facebook aren’t ignoring those numbers and know they need to implement video. After all, the very same report from Morgan Stanley believes YouTube will “generate $5.7 billion in video ads next year.” That number goes up to a whopping $16.9 billion in 2019.

Advertisers are waiting patiently to be able to reach the hundreds of millions of users on Facebook through more effective advertising; ads similar to TV spots that dominate the advertising field. There’s one problem however.

Facebook’s Balancing Act

Adding video advertising to a video-less Facebook is quite a change to how people interact with the social media site. Video ads were expected this summer, and many analysts now think that they will show up at some point in the fall. Why the hold up?

According to Evelyn M. Rusli and Suzanne Vranica at the Wall Street Journal, “CEO Mark Zuckerberg doesn’t want to annoy Facebook’s 1.1 billion members.”

Yep, that’s the issue Facebook is struggling with when it comes to implementing this potentially (extremely) lucrative advertising system to its site. Any changes to the site that could reduce users’ time on it, or at worst frustrate them into not wanting to use Facebook, would be extremely detrimental.

Once Facebook feels comfortable “striking that balance between consumer happiness and commercial opportunity” as Evelyn and Suzanne write, I think it’s safe to say that video ads will come very quickly to Facebook. How users react will depend on how Facebook manages to strike this balance.

Will your business or agency use Facebook video ads? Do you think they will be a turn off for users of Facebook?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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