Facebook Is Making The Move To Programmatic Ads — Game Publishers Should Follow.

This article was originally published on Appodeal Blog. 

What began as a small video ad tech startup has morphed into the symbol of Facebook’s desire to control all things video (and let’s not forget mobile, too). With talk of the social media giant becoming all video all the time by 2017, publishers are left wondering as to where the rise of video advertising began  – and are eager to understand where it’s headed.

To unravel the winding thread, we’ll begin with a look at LiveRail’s history and Facebook’s growing focus on video advertising. This development has the potential to revolutionize mobile app advertising thanks to LiveRail’s function as programmatic mediation, a growing trend in the industry.

LiveRail, the supply-side platform, began in 2007 as a means for publishers, broadcasters and mobile app developers to better target users through video advertising. After helping their users target 7 billion video ads to viewers per month, the startup caught Facebook’s eye. Acquired for an estimated $400 to $500 million on July 2, 2014, LiveRail now functions as the ad server for Facebook’s video ads and audience network.

This past March, Facebook revealed improvements to LiveRail including the added capability for publishers to sell video and display ads on mobile apps and the availability of Facebook user data for enhanced targeting. With these updates, publishers can do more than use LiveRail’s ad exchange to sell ad space for mobile display ads. They can also offer targeted advertising on platforms outside of Facebook.

To date, LiveRail supports native, banner, interstitials and of course, video ads. But what’s more compelling is Facebook’s no-holds-barred ascent on video advertising.

Facebook is gunning to become the king of video advertising and is anything but shy about revealing their desire to claim the throne. A quick look at market trends will explain why.

Though 2015 will seemingly go down in history as the year of video, Facebook unleashed their strategy in March 2014. Through their App Installs Ad service, they began showing 15-second video ads on auto-play.

Today, Facebook is quickly profiting off of the growing union of mobile and union with 65% of Facebook video views occurring on mobile devices. So, not only do they want to become synonymous with video advertising, they want to stake their claim on the mobile domain. To date, 78% of Facebook’s total advertising revenue comes from mobile.

On November 4, Facebook reported the success of their video advertising in their Third Quarter 2015 Earnings Conference Call. Daily video views average 8 billion a day from 500 million users. That’s double the number of views, as compared with April’s reported 4 billion daily video views.

Facebook also has Instagram on their side as a strong right arm. Acquired for $1 billion in 2012, the popular photo-sharing network is quickly becoming one of their largest ad inventories (and there’s word it will be available programmatically over LiveRail soon).

On November 10, Instagram announced their marketing Partner Program, designed to connect advertisers with partners and the Instagram community. This announcement comes just 2 months after their 30-second video ad launch.

Of course, Facebook isn’t the only network seeking to capitalize on the video market. SnapChat is right on their heels with 6 billion daily video views. (It looks like refusing Facebook’s $3 million bid back in 2013 was a wise decision.)

While they’re poised to usurp YouTube as the sovereign ruler of video, it’s important to remember Facebook counts videos differently than other networks, thanks to their autoplay feature. YouTube, on the other hand, requires around 30-seconds of play time to count a view.

While watching Facebook and YouTube duke it out for power is certainly entertaining, what does the rise of video advertising mean for mobile publishers?

2016 should show us if all the glitter surrounding video really leads to gold. But as the new year draws closer,  focus on these key takeaways to prepare for what will come:

While television advertising still reigns as the top medium, its tenure is bound to come to an end as viewers unite more closely with their mobile devices. Of course, one network will have to assume the role as ruler, but despite Facebook’s fervor, the position of Video Advertising King is still up for grabs.
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This article was originally published on Appodeal Blog. 
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Appodeal is a programmatic ad mediation solution for mobile app publishers. We increase revenue for publishers by engaging ad networks in real-time auction-based competition for every ad impression.