Television advertisements reel in the big money, and Facebook now has plans to tap this lucrative business. The company intends to incorporate TV-style commercials into its social networking website, which will reportedly retail between $1 and $2.5 million per day, say two sources familiar with the matter.
According to Bloomberg, the initiative has largely been driven by the emergence of online video channels. In recent years, YouTube has begun to intersperse short commercials between their regular content. Mass media corporations such as AOL have also attempted to enter this growing market, releasing a CNN-like video streaming service by the name of HuffPost Live.
There's no denying that placing targeted commercials into its members' News Feeds will spike revenues; however, the California-based company doesn't want to be overly obtrusive, either. CEO Mark Zuckerberg, said, "One of the things I watch most closely is the quality of our ads and people's sentiment around them. We haven't measured a meaningful drop in satisfaction."
The commercials will be approximately 15 seconds in length, which is comparable to the Instagram videos that most of us have grown accustomed to. The ads will make up just 5% of a person's News Feed, which works out to be exactly one in 20 conventional wall posts, photo uploads, or status updates. And much like traditional TV ads, the commercials will be targeted using only age and gender information; parameters such as location and personal interests will be disregarded.
Perhaps the greatest part of the upcoming ad service is that members won't see a commercial more than three times in a single day. Although advertising is never welcomed by the general public, and this news is certainly nothing to rejoice about, at least Facebook is making some kind of effort to protect the user experience. Investors have adopted a similar viewpoint, seeing as Facebook share prices rose to $37.63 on Tuesday, its highest price since May of 2012 - the same month of the company's $38 IPO.