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The Unknowns in Facebook’s Video Push

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A dedicated video destination

It seems that Facebook’s (FB) path to digital video business hasn’t been paved yet. The company faces numerous uncertainties about its video strategy.

For example, Bloomberg recently reported that Facebook Spotlight, a dedicated video tab that was scheduled to debut in early 2017, may be delayed until later this year. The company had already pushed back the launch of Spotlight, with June was cited as the month it would go active. The launch is still pending.

A dedicated video tab is a necessary feature for Facebook because its users typically watch videos shared on their newsfeeds for about two minutes. A dedicated video destination could increase video viewing time and reward publishers who depend on advertising to monetize their content. 

Facebook is competing with Twitter (TWTR) and Alphabet’s (GOOGL) YouTube for the attention of online video viewers.

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Facebook discussing video details verbally

Facebook’s exact video monetization strategy is also a gray area for many, including the company’s content partners. According to a Bloomberg report, Facebook prefers to discuss its video product details verbally with its partners, possibly because its video strategy has yet to crystallize.

Video ad format

Videos shared on Facebook are expected to be monetized (QQQ) (XLK) through mid-roll ads. The company trialed the ad format with the partners it signed for the short video clips. Those partners included The New York Times Company (NYT). Long-form videos are expected to allow Facebook ample room to insert mid-roll ads. YouTube combines the pre-roll and mid-roll ad format in its video monetization strategy.

As shown in the chart above, eMarketer forecasts that US (SPY) businesses could spend $16.7 billion on digital video advertising by 2020.

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