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Why Video Ads Could Be Facebook’s Next Growth Driver

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Facebook has become a serious player in the video ad market

Over the last year or so, Facebook (FB) has made rapid strides in the video ad market. According to Facebook, more than 8 billion video views occur on its platform from more than 500 million people daily. Alphabet’s (GOOG) (GOOGL) YouTube remains the dominant player in the video ad market, but Facebook has launched a number of video features to challenge YouTube.

Earlier this year, Facebook started to focus on autoplay video ads in a user’s News Feed. Then it experimented with other video formats such as Suggested Videos. Suggested Videos produces content from professional media companies, which is similar to what YouTube offers. In the last quarter, Facebook added the live video feature to its Mentions app. Facebook defines the Mentions app as “a better way for actors, athletes, journalists and other public figures to stay in touch with their followers and the people and topics they care about.”

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Facebook and Twitter are looking to leverage the fast-growing video ad market

This is a clear strategy from Facebook to leverage the fast-growing video ad market. According to a report from eMarketer and as the above graph shows, the US digital video ad market could keep growing at a healthy rate, from $5.9 billion in 2014 to $12.3 billion in 2018.

Even Twitter (TWTR) is looking to leverage this fast-growing market with the launch of its autoplay videos feature. These videos play automatically on a user’s timeline but are muted as the user scrolls down the timeline. If you’re bullish about Facebook, you can invest in the PowerShares QQQ Trust, Series 1 (QQQ). QQQ invests about 4.4% of its holdings in Facebook.

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