Facebook is YouTube's Biggest Threat
Jason Beckerman, Chief Product Officer
In the marketing world, video is the undisputed killer medium. The industry's conventional wisdom is that YouTube has an insurmountable lead in the video advertising market. That conventional wisdom is dead wrong.
Despite the attention that YouTube gets for providing content creators — some of whom make serious money — with a platform to gain attention and drive ad dollars, as a business, YouTube does just $4 billion in revenue annually. While it is making video gaming color commentators famous, YouTube barely breaks even, despite its intense focus on brand advertisers.
If brands want to drive success using video, they should look beyond YouTube, because Facebook and its growing network of channels are poised to disrupt the world of video advertising. In the process, Facebook is going to eat YouTube's lunch.
That's a big statement. Many people might not believe it, but they don't have access to the data that I do. This is why I know it's accurate:
Scale & Personalization
With more than 1.5 billion active users, Facebook's user base is 50 percent larger than YouTube's. Facebook users already watch 4 billion videos daily.
Facebook also provides something much more important than a huge user base: When combined with marketing automation technology, Facebook enables personalized video at scale. When video is personalized to consumers, it strikes a chord and an emotional connection with them. Those consumers not only engage with video on Facebook, they also promote and share it with their friends in ways that just don't happen on YouTube.
Facebook is also a much stickier destination than YouTube. Put simply, how many people do you know who say things like, "Hold on, I just need to check YouTube?" Facebook's News Feed is where consumers live — 60 percent of users say that it is their primary source for news. The more people return to Facebook on a daily or even hourly basis, the more video they'll see. Most importantly, 75 percent of Facebook videos are consumed on mobile devices, versus just 50 percent of YouTube videos that are watched on mobile. In a mobile-first world, that's critical.
Speaking of mobile, Facebook owns Instagram and its user base of more than 300 million. Instagram introduced video advertising last year, and we've seen staggering results that blow away expectations based on any metric you can imagine. Feedback from our Fortune 500 customers has been enthusiastic, and we know that video at scale is coming to Instagram –and soon.
Channel-wise, Facebook also owns WhatsApp, which is rapidly approaching 1 billion users, and Oculus VR, which has the potential to be the most immersive video advertising platform in history.
Lastly, Facebook has the advantage of Atlas, the ad server technology it acquired last year. Atlas extends beyond Facebook's own desktop and mobile properties to all digital advertising, with return-on-investment measurement that far exceeds that of outdated cookie technology–yet it leverages the power of Facebook identities, and it can be extended to hundreds of thousands of publishers across the Web.
Scale alone isn't enough to dislodge a market incumbent. However, Facebook has another killer tool in its arsenal: identity-based targeting.
Facebook, on the other hand, knows a wealth of information about its users. Age, gender and other demographic information are available as targeting options for advertisers, along with interest targeting. Not only is this targeting far more accurate than cookie targeting, it allows advertisers to segment audiences and match them with personalized video content. When done efficiently and at scale, this drives costs per view down to a point that YouTube just can't touch.
Measurement & ROI
Thanks to Facebook's and Instagram's powerful Ads APIs, marketers who are leveraging video can prove the ROI from their efforts in very powerful ways. No matter what your business goal– sales, engagement, lead generation, brand health elevation–the combination of the Ads API and big data platforms can prove that you're driving success.
Facebook's custom audiences also enable analytics in ways that cookies never could. They are basically like cookie pools of users who have engaged with your video — but they never expire. A major entertainment client used our platform to deliver an audience analysis that compared the attributes of people who watched a full video versus who started watching but dropped off. We could then understand the archetype of people who are consuming content from this brand.
The possibilities for other verticals are endless. For example, auto companies could cross-reference audience analysis with a customer-relationship-management owner file to determine if content consumers bought cars or are owners.
The best that YouTube can provide is geographical reporting. Geography pales in comparison to the rich psychographic details available on Facebook video engagers.
Facebook is just getting started in video advertising. Its early results have been nothing short of amazing, and its distribution possibilities via Instagram and Atlas create opportunities that YouTube just can't match. This race isn't even going to be close–but it will be a fun one to watch.
YouTube knows that it has ground to make up, and it is responding. Just last week, CEO Susan Wojcicki announced a mobile redesign and that more than one-half of its views are coming from mobile. On the Facebook side, I believe that we'll hear some really interesting things about video during its second-quarter earnings call later this week. Stay tuned!
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