VIDEO ADVERTISINGHow Facebook, Twitter, Instagram, Tumblr and Snapchat Are Changing the Rules

DECEMBER 2014

Debra Aho Williamson

Contributors: Rebecca Chadwick, Danielle Drolet, Corey McNair

Read this on eMarketer for iPad

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CONTENTS2 Executive Summary

3 Social Properties Are Becoming Major Video Platforms

5 Facebook: Redefining Video Advertising

9 Twitter: Beyond TV Partnerships

10 Instagram: Bid for Exclusivity

11 Tumblr: Reaching Passionate Fans

12 Snapchat: Bringing Video to Real-Time Marketing

13 Two Big Questions About Video in Social Media (and Some Answers)

16 eMarketer Interviews

17 Related eMarketer Reports

17 Related Links

17 Editorial and Production Contributors

EXECUTIVE SUMMARY

It’s primetime for video in social media.

2015 will see a rapid increase in video advertising on Facebook and other social platforms. Facebook in particular is coming on strong and has the potential to put pressure on YouTube, which captures nearly 20% of US video advertising spending right now, according to eMarketer estimates.

Facebook isn’t the only one angling for a slice of the video advertising pie. Twitter is beta testing Promoted Videos; Instagram is rolling out video advertising; and Tumblr and Snapchat have new video ad products.

This report details the growth of video on social properties and assesses the benefits and drawbacks of placing video ads on Facebook, Twitter, Instagram, Tumblr and Snapchat. In addition, the report looks at two important issues: whether these new video ad offerings are causing TV budgets to shift, and how the social platforms are complicating the viewability issue.

This is one of two linked reports about video advertising in social media. See our related report, “Video Advertising in Social Media: 11 Insights to Help You Make the Most of It,” for advice and insights drawn from in-depth interviews with executives and thought leaders at agencies, marketers and publishers.

KEY QUESTIONS ■ How much video is consumed on social platforms?

■ How is Facebook redefining video advertising, and

how much of a threat will it be to YouTube?

■ Will Twitter’s strong ties with the TV business lead

to success in video ads?

■ What role will Instagram, Tumblr and

Snapchat play?

■ Will TV ad budgets shift, and how are the social

platforms complicating the viewability debate?

% of respondents

Streaming Sites/Apps Used to Watch Digital VideoAmong US Digital Video Viewers, June 2014

YouTube75%

Facebook33%

Netflix28%

Yahoo17%

Hulu14%

Instagram10%

Hulu Plus9%

Vimeo7%

Dailymotion7%

Vine7%

Note: n=2,081 ages 8-64 who watch video on a connected TV, computer,smartphone or tabletSource: Frank N. Magid Associates survey as cited in Jefferies, "Internet:The Evolving Distribution of Content," Oct 20, 2014181045 www.eMarketer.com

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SOCIAL PROPERTIES ARE BECOMING MAJOR VIDEO PLATFORMS

Cisco predicted in a June 2014 report that video will

account for 80% to 90% of global consumer internet

traffic by 2018. If Facebook, Twitter and others have

their way, they will be the conduits through which a

significant portion of that video moves.

Facebook already ranks as the second biggest online video property in the US, according to comScore data from October 2014. The ranking only includes desktop viewers, not mobile.

millions

Top 10 Online Video Properties Among US InternetUsers, Ranked by Unique Viewers, Oct 2014

1. Google sites 162.3

2. Facebook 93.8

3. AOL 86.3

4. Yahoo sites 57.1

5. VEVO 48.2

6. Maker Studios 45.6

7. Amazon sites 44.0

8. AnyClip Media42.0

9. Vimeo 38.9

10. Fullscreen 37.3

Note: home and work locations; content videos only; for long-form,segmented content (e.g., TV episodes with ads in the middle) eachsegment is counted as a distinct video stream; video views are inclusive ofboth user-initiated and auto-played videos that are viewed for longer than 3secondsSource: comScore Video Metrix as cited in press release, Nov 21, 2014182923 www.eMarketer.com

While platforms such as YouTube and streaming video players still attract many internet users, a greater percentage use social networks for video than use other types of video platforms, such as news sites. According to a 2014 survey by Google and TNS, 73% of internet users in the US and in Canada used a video site or app to watch digital video. Social networks ranked second, at 30% of respondents in Canada and 29% of US respondents.

% of respondents

Types of Sites/Apps Used by Internet Users in Canadaand the US to Watch Digital Video, 2014

Online video sites/apps73%

73%

Social networks30%

29%

News or magazine sites/apps8%

9%

Catch-up TV player4%

5%

Other4%

5%

Canada US

Note: among those who watched digital video in the past 7 daysSource: Google and TNS, "Consumer Barometer," Oct 2014181529 www.eMarketer.com

A study like the one above might be perceived as biased, considering that Google owns YouTube, but a study from Frank N. Magid Associates, conducted in June 2014, had a similar finding. Here, Facebook was used by 33% of digital video viewers, trailing YouTube’s 75% but a greater percentage than other well-known video services like Netflix and Hulu.

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% of respondents

Streaming Sites/Apps Used to Watch Digital VideoAmong US Digital Video Viewers, June 2014

YouTube75%

Facebook33%

Netflix28%

Yahoo17%

Hulu14%

Instagram10%

Hulu Plus9%

Vimeo7%

Dailymotion7%

Vine7%

Note: n=2,081 ages 8-64 who watch video on a connected TV, computer,smartphone or tabletSource: Frank N. Magid Associates survey as cited in Jefferies, "Internet:The Evolving Distribution of Content," Oct 20, 2014181045 www.eMarketer.com

“We are seeing a little bit of a shift in how consumers are consuming video,” said Steve Carbone, managing director and head of digital and analytics at MediaCom USA. “It used to be YouTube was the first place that they go to search and see video, but a lot of those initial video impressions are happening on [Facebook’s] newsfeed. And then the second and third views are happening after they are being searched for on YouTube.”

Social properties provide a different viewing experience than YouTube or a TV network’s streaming player. A key differentiating element is the ease with which users can share and comment.

The ALS Ice Bucket Challenge typifies this difference. It showed that Facebook users were not only willing to upload video of themselves being doused with ice water, but also that they would use Facebook’s sharing and tagging features to encourage others to view and participate.

Between June 1 and September 1, 2014, 17 million videos related to the ALS challenge were uploaded to Facebook; they were viewed more than 10 billion times by 440 million Facebook users.

All of these developments are causing marketers to change how they think about the role of video in social media.

■ “We are looking at social platforms at large as a

new video distribution opportunity. This is a whole

new space for us to be able to distribute our video

assets.”—Natalie Bokenham, vice president and

managing director of digital, UM Worldwide

■ “It’s not just YouTube anymore. It’s figuring out

how to incorporate snackable video content on

channels like Instagram, Vine, animated GIFs, etc.

Your content has to have a lot of legs that can span

multiple channels.”—Kellee Montgomery, social

and emerging digital marketing manager, Ford

Motor Co.

■ “Where it used to be every marketer just looked at

YouTube, now we see that shifting to Facebook and

Twitter.”—David Vogt, associate director of digital

strategy, Vizeum

With the groundwork laid for social media to become a common place where consumers view and share video and where marketers distribute video, video advertising is poised to grow as well. The next sections detail the video ad opportunities on Facebook, Twitter, Instagram, Tumblr and Snapchat.

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FACEBOOK: REDEFINING VIDEO ADVERTISING

Facebook is on a global push to make video its next

big ad format.

In marketing presentations from New York to Abu Dhabi this fall, Facebook has been touting its video capabilities.

Facebook’s CEO, Mark Zuckerberg, indicated during the company’s Q3 2014 earnings conference call that video could be as important a content type on Facebook as photos have become. “If you go back five years, most of the content was text. Now, a lot of it is photos,” he said. “If you look in the future, as networks get better and the ability to capture good video and share it in a good way improves, then I think that going forward a lot of the content that people share will be video.”

On the same call, chief operating officer Sheryl Sandberg tried to temper expectations, saying, “We think there is good opportunity with both video and Instagram ads, but we’re going to remain deliberate and slow in our approach to scaling those businesses.”

But Facebook’s recent moves show a major push into video advertising. In the past six months Facebook has:

■ Introduced autoplay ads, which start to play as a

user scrolls through the feed

■ Acquired LiveRail, one of the leading platforms for

programmatic video advertising

■ Launched a set of video metrics, including the

video-view count, enabling comparisons with

performance on YouTube and other platforms

eMarketer’s interviews confirm there is strong interest in testing Facebook’s video advertising.

■ “Facebook’s targeting and mass reach is just so

dominant right now. Having the opportunity to do

Facebook video [advertising] almost seems like a

no-brainer.”—Kevin Hung, senior vice president and

digital innovations director, Havas Media Chicago

■ “I would expect to see the share of budget going to

Facebook video to increase pretty substantially over

2015.”—Noah Mallin, head of social, North America,

MEC Global

■ “There may not be any more powerful video

distribution medium than Facebook at the

moment.”—Maikel O’Hanlon, vice president of

social media strategy, Horizon Media

Just how much digital video ad revenue Facebook will generate will be a closely watched subject. Investment bank JMP Securities in October 2014 called video “a multi-billion dollar opportunity for Facebook.”

Facebook won’t get there next year, however. RBC in August 2014 estimated that it could see $700 million in worldwide revenue from autoplay video ads in 2015.

eMarketer forecasts that marketers will spend $7.77 billion on digital video in the US in 2015, up 30.4% from 2014.

billions and % changeUS Digital Video Ad Spending, 2013-2018

2013

$3.82

32.2%

2014

$5.96

56.0%

2015

$7.77

2016

$9.59

2017

$11.25

2018

$12.82

Digital video ad spending % change

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets; includes in-banner, in-stream andin-textSource: eMarketer, Sep 2014; confirmed and republished, Dec 2014178390 www.eMarketer.com

30.4%23.4%

17.3%13.9%

At this point, eMarketer does not forecast video ad revenue for Facebook. There are a number of factors. First, the company has not broken out any data for the video revenue, and, per Sandberg’s comment, it is attempting to mute expectations for now. Second, the few third-party estimates of possible revenue levels vary widely. Taken together, eMarketer does not feel there is sufficient data to make an estimate.

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FACEBOOK VS. YOUTUBE: BY THE NUMBERS Just how big a challenge will Facebook be to YouTube? eMarketer believes that while Facebook has grown quickly as a video platform, there are many reasons to think YouTube will continue to be a favored video advertising destination for marketers, and that Facebook’s entry could help grow the overall video market, rather than take away from YouTube.

eMarketer expects YouTube’s video ad revenues will rise in 2015. We forecast that it will have $1.55 billion in net US video ad revenue next year, amounting to a 20.0% share. That would be up from 18.8% in 2014.

In recent months, media reports have declared YouTube in trouble—or even dead—as a result of Facebook’s moves. But an in-depth analysis of the data behind some of these reports reveals a different picture.

One set of data that got a great deal of publicity was a comScore finding that Facebook had more desktop video views than Google did in August 2014.

billions

Number of Videos Viewed via Facebook vs. GoogleSites* by US Internet Users, June 2013 & Aug 2014

June 2013

15.7

0.7

Aug 2014

11.312.3

Google sites* Facebook

Note: ages 15+; desktop only; *includes YouTubeSource: comScore Video Metrix, "5 Things We've Learned About OnlineVideo," Oct 9, 2014180668 www.eMarketer.com

While the data shows that Facebook has been successful at incorporating more video in the newsfeed, the change isn’t as shocking as the chart makes it seem.

■ In June 2013, there was far less video on Facebook

than in August 2014, and users had to click to

launch a player to view it. August 2014 was the

height of the ALS Ice Bucket Challenge and by then,

autoplay was a standard feature. These two things

led to a bump in video views.

■ A view on Facebook isn’t the same as a view on

Google/YouTube. Facebook videos autoplay, while

on YouTube, a user must initiate the view by clicking

to play the video. This implies a different level of

engagement on the part of the user.

■ The data only compares desktop views. Facebook

still trails Google in total video views, including

mobile, according to Beet.tv.

In another study, Socialbakers reported in October 2014 that “social media marketers have done more than just walked away from using YouTube for video content—they have sprinted.”

To support that conclusion, it cited its analysis of 180,000 video posts on 20,000 Facebook pages owned by businesses, brands or organizations. The company found that between January and September 2014, Facebook pages increased their use of native Facebook videos by 64%. Moreover, Socialbakers said that in September 2014 more than 70% of the interactions with videos that pages posted were with Facebook videos (as opposed to videos from YouTube or other companies).

The fact that pages increased their use of native Facebook video over the past few months isn’t surprising given Facebook’s heavy push to encourage them to try it. And while it sounds impressive that 70% of interactions were with Facebook native videos, Socialbakers’ blog post indicates that in January, Facebook’s share was already at around 60%.

A third analysis compared the performance of #MontyThePenguin, a holiday-themed video that UK retailer John Lewis uploaded on November 6 to Facebook and YouTube. In the first 24 hours, according to data from marketing technology company Unruly cited by The Telegraph, the video was shared 202,953 times, with 156,000 shares on Facebook and 47,000 on YouTube.

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However, sharing is easier on Facebook than on YouTube, and is only one measure of success. As of December 16, the video had 20.5 million views on YouTube vs. 6.2 million on Facebook.

What this data, along with eMarketer’s interviews with marketers and agencies, indicate is that while there is no question Facebook is growing as a video platform, its impact on YouTube may not be what it seems.

As Carbone of MediaCom USA put it: “I love Facebook video. I have no issue with it all. But that doesn’t mean I’m going to stop using YouTube. I want to use as many platforms as I can to push my message out.”

For more on YouTube’s advertising business, please see the report “YouTube Advertising: Ins and Outs of Making It Work.”

BENEFITS AND DRAWBACKS Facebook’s efforts to redefine video advertising are creating several benefits for marketers, but also some risks to be aware of. Among the benefits are the ease with which ads can be shared, Facebook’s strong mobile presence, and its native video player. However, Facebook’s search capabilities are limited, the feed is ephemeral and it isn’t a destination for video so much as it is a sharing tool.

Benefits Sharing: Marketers that have experimented with video ads on Facebook say they can get a great deal of organic distribution on top of paid distribution. The viral potential is appealing, said O’Hanlon, of Horizon Media. “I see Facebook becoming an enormous player in the video distribution space, and that is the byproduct of the level of targeting and the size of the audience and the way Facebook has found to present the video experience.”

Mobile: As mobile video grows, Facebook is well positioned. In Q3 2014, 83% of its worldwide users accessed Facebook on mobile. Google doesn’t release comparable figures about YouTube, but according to GlobalWebIndex, in Q3 2014 39% of worldwide internet users had visited YouTube on a mobile device.

“The native player on Facebook … offers a better mobile experience. That’s going to be critically important given the numbers in mobile video usage and the value of mobile video viewers,” said Kevin Lange, senior vice president and social media director at Starcom MediaVest.

Targeting: Facebook’s targeting capabilities are a key reason why its ad business has grown rapidly. That same targeting will be available to video advertisers, enabling them to target the people most likely to respond. “You definitely get more targeting capability inside a platform like Facebook than you would get anywhere else,” said Mark Aikman, department manager for digital marketing and customer relationship management at Mercedes-Benz.

Native video player: Facebook is wooing publishers and marketers to upload their videos directly to Facebook, rather than link to a third-party site such as YouTube. There are several benefits to using native video on Facebook, including the fact that the video appears larger in the feed and that it autoplays. In addition, Facebook provides more analytics and the ability to retarget based on video viewing.

“If you’re looking to retarget consumers off of video consumption, that is a benefit of a native player vs. embedding a link,” said Vogt, of Vizeum.

Autoplay: Autoplay is a benefit because it gives users a taste of what a video is like. An ad that must be clicked to be played is judged based only on the static image. “The autoplay feature lets someone get a little snippet of what you’re offering, and it really brings people in. We love it as a brand,” said Katie Fischer, US media manager for Beam Suntory.

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Drawbacks Limited search capabilities: Although Facebook has improved its search functionality, nothing can beat the fact that YouTube is the second largest search engine after Google, according to comScore. Finding a video that you saw in your newsfeed a couple days ago got easier only recently, with the launch of improved search functionality. But finding videos is still much easier to do on YouTube.

This means that for now, Facebook will not be somewhere people go to look for videos. “I don’t see Facebook becoming a video destination, the way that people know to go to YouTube or Hulu or Vimeo to search for video,” said O’Hanlon.

It also means marketers must consider people’s mindset when they view videos on Facebook vs. other platforms. “Google and YouTube are the two largest search engines in the world right now. Facebook is a social utility platform,” said Hung. “The consumers’ frame of mind when they’re in either of those spaces has a lot to do with how receptive they are to advertising.”

Not a library: One of YouTube’s strengths is the fact that marketers can use it as a library for their video assets. Many have gotten used to pointing their video advertising there. Although Facebook is making a strong pitch to convince marketers to upload videos directly, it’s not the same experience as they get by uploading videos to YouTube.

“Where does your video live before it gets distributed? At the moment it makes sense for it to be on YouTube because that’s where all your videos can be together and then you can fish them out as needed,” said Bokenham.

Facebook promises improvements. “We understand that marketers want this repository of videos, but when we look at user consumption patterns, it’s mostly in feed, so that’s why we’ve focused there,” said Fidji Simo, product director for ads-newsfeed and video at Facebook. “We recognize that having a central place would help, especially if you’ve seen it in the feed and you want to find it later on. So we’re going to make that experience better.”

CPM pricing: Autoplay isn’t automatic for all advertisers. Video ads won’t autoplay if advertisers use cost-per-click bidding to buy them. Facebook recommends advertisers use either CPM or reach-and-frequency buying optimized for video views. This can be a drawback for advertisers that want to pay for ads based on a deeper action than an impression. It is also a different model than YouTube or Twitter uses.

“They’re going to have to start charging in a way that’s competitive to YouTube. When you have a YouTube player where you’re only paying for a completed view, and then you have a Facebook that’s charging with CPMs, that’s more of a TV model,” said Renee Whittingstall, partner and digital media director at MediaCom USA.

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TWITTER: BEYOND TV PARTNERSHIPS

Twitter’s foray into video advertising involves two ad

products that may eventually become one.

Last year, Twitter unveiled Amplify, which places pre-roll ads on short video clips that TV networks and other video providers upload to Twitter. Amplify now has over 100 partners, many of whom use it to distribute real-time video such as exciting moments in a sporting event, clips from live awards shows and breaking news.

More recently, Twitter began a beta test for Promoted Video. These are essentially Promoted Tweets that include a video. While Amplify ads are limited to 6 seconds, Promoted Video ads can be several minutes long and don’t need to be associated with other content.

Among the advertisers that have tested the newer format is Budweiser, which promoted a followup to its highly regarded puppy spot that aired during the 2014 Super Bowl. The new ad, #FriendsAreWaiting, got more than 2.5 million views in the first week after its release on Twitter during the fall. Twitter said the ad had a 6:1 earned to paid ratio, meaning that for every paid view, the ad had 6 unpaid, or earned, views from people retweeting and sharing it.

The company does not break out its video ad revenue, but the figure is likely only in the tens of millions of dollars. In November 2014, Twitter said that four new ad formats (website cards, mobile app install ads, video ads and off-network ads) combined to generate $93 million in revenue in Q3 2014.

Video “is one of our fastest-growing lines of business; we’re seeing tremendous demand for it,” said Baljeet Singh, product director for TV, video and music at Twitter.

One difference between Twitter’s video ads and Facebook’s video ads is that the Twitter ads do not autoplay. A user must click to start the ad. However, media reports that surfaced as this report was being published indicated that Twitter was considering using autoplay.

Benefits TV relationships: Twitter’s partnerships with TV make it appealing to advertisers who want to extend their message. “We’ve taken assets like our video brochures and [created an ad that said,] ‘You just saw the C-Class commercial; explore the C-Class for yourself,’” said Aikman of Mercedes-Benz. “We’ve found that those not only break some of Twitter’s advertising benchmarks, but they’ve been phenomenal traffic drivers.”

Real-time: Twitter has long been associated with discussions surrounding real-time news and events, and its Amplify product is designed to take advantage of that. Promoted Video also has a real-time component. “Twitter’s key selling point is real-time conversation targeting. If you have content that’s specific to a certain topic, be it fashion or cultural events or cold and flu conversations, since we’re in that season now, it makes the video content that much more relevant,” Vogt said.

Vine: Marketers appreciate the creative opportunities provided by Vine as well as its close ties with parent company Twitter. Although there are no plans to monetize Vine yet, some companies have used Vines as ads on Twitter and even on TV. HP, for example, turned a series of Vine videos into a TV spot that showed off the capabilities of a notebook computer that can turn into a tablet.

Drawbacks Scale: Twitter’s smaller size is still baggage for some advertisers. “With Twitter, there are concerns around the scale when you stack it up against what Facebook brings to the table,” said O’Hanlon.

Format: Twitter’s roots as a service for mobile phones is evident in the fact that it is still very text-heavy, even as it has tried to incorporate more images and graphics into the timeline. Video, to some marketers, seems out of place.

Ease of use (for Amplify): Although Amplify has more than 100 partners, the process of selling these ads can be cumbersome, a fact that Singh acknowledged, saying, “What we want to do is try to figure out ways to automate some of the process and take some of the friction out of the process for the brands and for the publishers.”

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In a typical Amplify execution, the publisher sells the 6-second pre-roll ad, and then the advertiser buys a Promoted Tweet to advertise the video. That two-step process has led to a situation where “today, there’s been a broader advertiser adoption of Promoted Video, because the creative canvas is open and it’s a standalone unit which means it doesn’t have to be associated with content,” Singh said.

Off-Twitter strategy: While Facebook owns LiveRail, one of the largest providers of programmatic video advertising, Twitter is less far along in its own plans to deliver video advertising outside of its walls. It owns MoPub, a mobile ad network and technology provider, but Singh characterized MoPub’s video capabilities as “early days.”

INSTAGRAM: BID FOR EXCLUSIVITY

Exclusivity is a key benefit of video advertising on

Instagram. Because Instagram is selective about

the types of marketers that can advertise there,

the prospect of being among the chosen ones

is appealing.

Video ads went live on Instagram in October. The first advertisers included Banana Republic, The Walt Disney Co., Lancôme and Activision.

“Any advertiser waving a checkbook can’t advertise on Instagram,” said Jonathan Anastas, vice president of digital marketing at Activision. “They’re looking at your current organic community and what kind of engagement you’re getting. Does it seem like a brand is a fit with the platform’s users? What is the quality of all of the assets you’re putting out there? To some degree, you have to be invited into advertising on Instagram.”

The price of admission is the willingness to live by Instagram’s rules, however.

“Instagram has a distinct aesthetic. There is a distinct community and way that people use the platform,” said Jim Squires, director of market operations at Instagram. “Then there is the format itself. It is a square format, and [the ads are] 15 seconds. Repurposing video content is typically not going to do as well and is not as encouraged.”

Benefits Engagement: Instagram’s message to advertisers is that it is a welcoming place for beautiful brand imagery. For example, Banana Republic’s ad showed a time-lapse of a designer sketching an outfit, which fit with the creative bent of many of Instagram’s users. However, Activision’s ad for the game Call of Duty was more similar to a 15-second TV commercial. Still, the results were positive.

“Since the campaign launched, while it’s still early, we’re seeing engagement metrics much higher than our overall social media averages,” said Anastas.

Relationship with Facebook: Although Instagram operates as a separate company within Facebook, Facebook’s ad sales team can sell Instagram ads if the client is a customer of both (the buys are done separately, however). Advertisers also anticipate more opportunities to cross-promote on both services.

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Creative opportunities: Instagram provides an opportunity to try out new forms of video marketing, such as its Hyperlapse time-lapse video app. Mercedes did two such videos, for the CLA model and the ML63 AMG sport-utility vehicle.

Likewise, Lancôme saw a chance to think past the typical TV spot when it ran ads for a fragrance and a mascara. “We want to challenge ourselves in thinking beyond traditional TV creative and be able to customize the video experience,” said Brian Chang, assistant vice president of media at L’Oréal Lancôme USA.

Drawbacks Targeting: So far, the targeting capabilities are limited, particularly in comparison to Facebook. Advertisers can only target by age, gender and country. “The Instagram platform should be smarter with the way that they’re targeting their ads. They have so much targeting capability, but they are rolling out really broad,” said Whittingstall.

Restrictions: Instagram’s guidelines for advertising won’t be a hit with some marketers. In addition to the fact that the video must be square and no longer than 15 seconds, Instagram doesn’t allow advertisers to overlay ad imagery with text, Squires said. There are additional internal guidelines that aren’t published or shared publicly, a spokesman added.

“The guidelines we have in place are to guide marketers to understand the platform and to put together creative that will fit well and ultimately achieve their objectives,” Squires said.

TUMBLR: REACHING PASSIONATE FANS

Tumblr this fall launched a native video player with

advertising partners including The CW Network,

Lexus, Ford Motor Co. and JCPenney. The ads

autoplay in a user’s stream, as Facebook’s do, but

have a novel twist; on the desktop, users can pop out

the video player and continue watching video content

while they scroll through their feed.

However, Tumblr isn’t expected to be a major player in video advertising. It will have just $100 million in revenue in 2015, including video and other forms of advertising, and most executives interviewed by eMarketer are intrigued but consider it a lower priority.

Tumblr prices its video ads on a cost-per-view basis. The ads loop silently unless a user clicks to play.

Benefits Immersive rather than interruptive experience: Unlike Twitter, which has been text-heavy and is now trying to work in more images and video, Tumblr has always been multimedia-heavy. Video fits more naturally.

“From the user perspective there is really no difference between an animated gif and an autoplay muted video,” said Lee Brown, global head of brand partnerships at Tumblr.

Relationship with Yahoo: In June, Yahoo began displaying some Tumblr ads on its sites, including Yahoo News and Yahoo Beauty. The ads appear as sponsored content or in-stream native ads. Although Tumblr’s video ads aren’t yet a part of this, it’s a possibility for the future.

The prospect of displaying Tumblr ads across Yahoo’s network “is very intriguing,” said Mallin of MEC Global. “When you add video to that, I think it starts to bring some of the scale that we look for.”

Time spent: Tumblr users tend to be very active, logging more time on the service than on other social platforms. According to November 2014 data from Cowen & Co., US users spend an average of 34.2 minutes per day on the service, second only to Facebook, at 42.1 minutes. People ages 18 to 29 reported the highest usage, 50.6 minutes per day, almost the same amount of time people in the same age group used Facebook (51.0 minutes).

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Drawbacks Size: Tumblr’s audience is smaller than other social properties; in a July 2014 survey, A.T. Kearney found that 11% of US internet users have an account, compared with 81% who were on Facebook, 37% on Twitter and 23% on Instagram.

Analytics: With the new video player, Tumblr offers many of the same video analytics as its competitors do, such as paid views, earned views, number of times the video is played and average completion rate. It also provides unique metrics, such as pop-outs and loops. But some marketers say that they want more. “Even with the new player, it doesn’t seem to have the same level of analytics that the other platforms have,” Anastas said. 

Targeting: Ads can only be targeted based on location, gender and interest on Tumblr. That has caused it to fall lower on the list for some advertisers. “We’ve got some concerns around Tumblr’s targeting capabilities. It’s not in our top tier of consideration at the moment,” O’Hanlon said.

Too much of a good thing: Tumblr’s youthful users upload a great deal of content and tend to be very active. While that’s generally a good thing, it can also be overwhelming for brands. “It’s a community that shares quite a bit. We wouldn’t be able to properly monitor or respond or maintain the level of community management inside a platform like Tumblr that we are able to on our other platforms,” Aikman said in explaining why Mercedes-Benz doesn’t yet have a presence on Tumblr.

SNAPCHAT: BRINGING VIDEO TO REAL-TIME MARKETING

Snapchat’s ability to curate video around live events

is intriguing to marketers, but its smaller user base

as well as the newness of its ad products makes it a

lower priority for most.

Snapchat launched Our Story in June; the feature allows multiple users to upload pictures and videos from the same location or event. The result is a package that represents users’ own experience of the event. So far, Snapchat has curated Our Story packages for events such as college football games, music festivals as well as the Indian holiday Diwali.

In November, Samsung became the first advertiser to sponsor an Our Story. It included images and videos that were labeled “sponsored” in an Our Story for the American Music Awards.

The possibilities intrigue marketers, who see similarities to live TV sponsorships and also to the way YouTube organizes content into ad-supported channels.

YouTube’s channels “monetize user-generated content video in a way that is safe for advertisers. That’s exactly what Snapchat is doing with Our Story— curating user-generated video around live events,” said Starcom’s Lange.

The Our Story ads follow Snapchat’s first foray into advertising. In October 2014 it began including occasional ads in a user’s Recent Updates list. Users can choose whether or not they want to view the ad, and it disappears after 24 hours.

Benefits A fresh take on curated user-generated video: The collection of images and videos gives an intimate perspective on an event, one that other services may not be able to duplicate. During some college football games, for example, Our Story included footage inside the locker room before and after the game, which fans don’t normally get to see, Sporting News reported in October 2014.

“I think [Our Story] has potential to be game-changing in terms of how user-generated video is both consumed and monetized by marketers,” said Lange.

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Real-time marketing: This can be both a benefit and a drawback. On the positive side, for marketers that routinely use Twitter to share real-time posts tied to news and events, Our Story provides another way to be relevant. A smart integration of a football-themed video ad in an Our Story about a big game would make the advertiser seem like it is paying attention.

Disappearing creative: This is also both a benefit and a drawback; the benefit for marketers is if their creative, or their product, in some way aligns with Snapchat’s user experience, in which Snaps disappear after they are viewed. “There’s a huge opportunity to do some really interesting things that marry media and creative because there’s a feature that disappears,” said Catherine Davis, US president for Vizeum. “When you think about the number of products and services where the ability to disappear is important, I think there are some incredibly creative solutions.”

Drawbacks Disappearing creative: For some marketers, the fact that ads on Snapchat don’t last long will be a drawback. There’s no archive of past Our Story collections. And in keeping with Snapchat’s mission to not make ads intrusive, users can easily skip over them if they appear in an Our Story. “They require brands to take a step outside of the comfort zone of the way that impressions have always been measured,” said O’Hanlon.

Real-time content is risky: Snapchat curates the content in Our Story, but there is still a risk that something a user uploads will not be appropriate or positive regarding a brand. Marketers that buy Our Story ads will need to accept this.

Targeting: Snapchat is purposely avoiding ads that it calls “creepy and targeted.” However, the lack of targeting will give some advertisers reason to delay using Snapchat. “I think we’ll have to see how video ads and Snapchat evolve to see if there are targeting capabilities or if we’re just talking about reaching broad-based enthusiasts,” said Aikman.

TWO BIG QUESTIONS ABOUT VIDEO IN SOCIAL MEDIA (AND SOME ANSWERS)

All of this activity raises two questions: Will video

advertising in social media help shift TV budgets

toward digital? And how do social platforms

complicate the ad viewability debate? What happens

in the coming year will help answer those questions.

WILL VIDEO HELP SOCIAL MEDIA GRAB TV BUDGETS? For almost as long as social media advertising has been in existence, the industry has speculated about whether properties like Facebook could tap into ad dollars earmarked for TV.

So far, traditional TV hasn’t been hurt. As social media advertising and digital video advertising spending has grown, so has spending on broadcast and cable TV. eMarketer forecasts that TV ad spending will reach $70.59 billion in 2015, up 3.0% from 2014. Digital video spending will rise to $7.77 billion, a 30.4% increase over 2014.

US TV* vs. Digital Ad Spending as a Percent of TotalMedia Ad Spending, 2013-2018

TV*

Digital**

—Desktop

—Mobile

Digital video***

—Desktop

—Mobile

Total mediaad spending(billions)

2013

38.8%

25.2%

19.0%

6.2%

2.2%

1.8%

0.4%

$170.95

2014

38.1%

28.2%

17.7%

10.6%

3.3%

2.5%

0.9%

$179.80

2015

37.3%

31.0%

15.9%

15.1%

4.1%

2.7%

1.4%

$189.06

2016

36.8%

33.5%

13.4%

20.1%

4.8%

2.8%

2.0%

$200.27

2017

36.2%

35.6%

12.1%

23.5%

5.4%

2.9%

2.4%

$210.02

2018

35.6%

37.5%

10.9%

26.6%

5.8%

3.0%

2.8%

$220.94

Note: *includes broadcast TV (network, syndication & spot) & cable TV;**includes advertising that appears on desktop and laptop computers aswell as mobile phones and tablets, and includes all the various formats ofadvertising on those platforms; ***includes advertising that appears ondesktop and laptop computers as well as mobile phones and tablets;includes in-banner, in-stream and in-textSource: eMarketer, Dec 2014182445 www.eMarketer.com

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But with Facebook’s aggressive push into video, and agencies’ willingness to scrape together a media budget for digital video from wherever they can find it, it is possible that marketers will dip more heavily into TV spending to fund video ads in social media.

And when a major agency holding company executive says publicly that his company is encouraging clients to shift spending from TV to digital video, the drumbeat gets louder. Omnicom Group’s Daryl Simm, CEO of media operations, told The Wall Street Journal in October 2014 that the holding company is “counseling our clients to move between 10% to 25% of TV dollars to online video.”

Meanwhile, UM, a division of the IPG agency holding company, inked a two-year, multimillion-dollar deal with Facebook in September 2014, doubling its expenditures there. Facebook’s Premium Video Ads were a key driving factor in the deal, and UM’s head of media, David Cohen, told Advertising Age that most of the budget would come from either TV or online video.

Whether these drips become a stream will become more clear in 2015, when advertisers make their upfront TV buys.

“On the TV side, we’re still not in the right cycle,” said Facebook’s Simo. “Next year is going to be when we will see” whether budgets shift.

“I think what Facebook is doing with their premium video product is a way for them to gain share of upfront video dollars. I expect to see quite a bit of growth around that product next year in the video upfronts,” said Lange, of Starcom.

But video in social media also presents a bucketing challenge, since it doesn’t fit easily into one media vertical. And advertisers may also dip into print and display budgets to fund expenditures.

“I’m not sure it’s banner money going to digital video or television money going towards digital video, or social money going towards digital video, so much as it’s a little bit of all of it,” said Anastas.

Another twist on the budgeting question is that some believe that TV budgets and digital video budgets will come together, with advertisers buying “video” in whatever platform or device makes sense. As O’Hanlon put it, “I think it’s a rare occurrence for any brand or even an agency to put together a unified video effort. That may be the way of the world going forward, but right now it still seems to be broken out, as opposed to treating video as a holistic asset that can run anyplace video can be served.”

HOW DO SOCIAL PLATFORMS COMPLICATE THE VIEWABILITY DEBATE? Viewability is a major concern across the ad industry; in a December 2014 study of browser-based desktop and mobile display ads (not including video ads), Google found that 56.1% of the ads were not seen.

But the issue doesn’t just impact display ads; it includes video as well. Viewability ranked as the top concern about video quality among US video buyers and sellers surveyed by Adap.tv in August 2014.

And because the social platforms have differing standards for what constitutes a video view, it is creating headaches for marketers and agencies and pitting the platforms against each other.

For example, here is how YouTube, Facebook and Twitter define a view:

YouTube: For TrueView in-stream ads, a view is recorded when viewers watch 30 seconds of the ad, or to completion, if the ad is under 30 seconds. For TrueView in-slate ads (which play before long-form YouTube partner videos over 10 minutes), a view is recorded when viewers choose to watch the ad, which is one of three they need to choose from, or if the viewer sees a video ad mid-roll during the video. For TrueView in-display ads or in-search ads, which run next to video content or search results, respectively, a view is recorded when viewers click on a video ad and begin watching the video.

Facebook: A view is recorded if the ad autoplays for at least 3 seconds before the user scrolls away.

Twitter: A view is recorded when someone clicks to play the ad and the ad starts.

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Further complicating the issue, the Media Rating Council (MRC), an industry body, in June released a standard defining a viewable video impression as 2 seconds, with the additional requirement that 50% of the ad’s pixels must be visible on the browser page. However, the MRC also said that if a video ad is clicked, it may “in certain instances, be considered a proxy for viewability.”

The lack of a common standard is worrisome to advertisers and agencies, which need to know when an ad is viewed and how to compare view counts across platforms.

“Facebook and much of the industry define a view as being at least 3 seconds. But YouTube, at least with their TrueView [in-stream] product, only charges advertisers for a view if the entire video is viewed,” said Starcom’s Lange. “Until the industry agrees on a more consistent standard, it’s just going to be important that advertisers are aware of the differences both when they’re planning and negotiating buys as well as interpreting results.”

“One of the big pushes that we have not just at MEC but across all of the GroupM companies is to go to a true viewability standard, and right now the social networks in general are just not there,” said Mallin. “Of course, we’re still buying and we’re still working with them, but the Holy Grail is having a measurement across every platform. This isn’t just an issue for social, it’s an issue across digital.”

Most executives interviewed by eMarketer said they thought Facebook’s 3-second rule was acceptable.

“A lot of advertisers and brands are saying, ‘Three seconds, is that an accurate measurement of whether someone’s actually viewed the video? My personal feeling is that it’s OK,” said Jeff Tan, director of digital strategy and communications planning at Vizeum. “Think about when you’re scrolling through your mobile newsfeed. If you actually stop and pause for 3 seconds to watch a video, even if it is on autoplay, that is generally a long time.”

In Facebook’s opinion, “if you’re just not interested in the video, you’re going to scroll past it in less than 3 seconds,” said Simo. “Given that there is no click, we try to find a proxy for intent, and sitting around for 3 seconds is definitely a strong proxy for that.”

However, Twitter’s Singh, while not specifically calling out any competitors, said his company is backing a stricter standard: “A view should be when there’s some sort of indication from the user that there’s an intention to view. I think there are some parties that are heading that direction, and that’s generally where we’re heading.”

Advertisers may have the final say in this debate; if they gain good results from video ads that play for a few seconds, then they will effectively back that standard by buying more ads on Facebook. However, if the ads do not perform as expected, YouTube and Twitter may be the beneficiaries of more spending.

There is no question that determining engagement is easier with the metrics YouTube and Twitter use. Actively clicking to play an ad signifies a level of interest, while letting an ad play for a few seconds is a more passive indicator.

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EMARKETER INTERVIEWS

Mercedes-Benz: Expanding Video Efforts Beyond YouTube

Mark Aikman Department Manager, Digital Marketing and Customer Relationship Management

Mercedes-Benz

Interview conducted on November 20, 2014

Activision Deploys First ‘Call of Duty’ Video Ad Spot on Instagram

Jonathan Anastas Vice President, Digital Marketing

Activision Interview conducted on November 12, 2014

Tumblr on Tumblr’s Video Posts: Authenticity Wins Fans

Lee Brown Global Head, Brand Partnerships

Tumblr Interview conducted on November 19, 2014

Lancôme USA Finds Instagram a Good Fit for Video

Brian Chang Assistant Vice President, Media

L’Oréal Lancôme USA Interview conducted on November 17, 2014

Beam’s New Bourbon Gets #FiredUp with Video Ads Across Social

Katie Fischer US Media Manager

Beam Suntory Interview conducted on November 13, 2014

Social Networks Becoming More Important as Video Destinations

Kevin Lange Senior Vice President and Social Media Director

Starcom MediaVest Interview conducted on November 6, 2014

Natalie Bokenham Vice President and Managing Director, Digital

UM Worldwide Interview conducted on October 29, 2014

Steve Carbone Managing Director and Head of Digital & Analytics

MediaCom USA Interview conducted on November 7, 2014

Catherine Davis President, US

Vizeum Interview conducted on November 12, 2014

Kevin Hung Senior Vice President and Digital Innovations Director

Havas Media Chicago

Interview conducted on November 10, 2014

Noah Mallin Head of Social, North America

MEC Global Interview conducted on October 30, 2014

Kellee Montgomery Social and Emerging Digital Marketing Manager

Ford Motor Co. Interview conducted on August 8, 2014

Maikel O’Hanlon Vice President, Social Media Strategy

Horizon Media Interview conducted on November 13, 2014

Fidji Simo Product Director, Ads Newsfeed and Video

Facebook Interview conducted on November 4, 2014

Baljeet Singh Product Director – TV, Video and Music

Twitter Interview conducted on November 18, 2014

Jim Squires Director, Market Operations

Instagram Interview conducted on November 4, 2014

Jeff Tan Director, Digital Strategy and Communications Planning

Vizeum

Interview conducted on November 12, 2014

VIDEO ADVERTISING: HOW FACEBOOK, TWITTER, INSTAGRAM, TUMBLR AND SNAPCHAT ARE CHANGING THE RULES ©2014 EMARKETER INC. ALL RIGHTS RESERVED 17

David Vogt Associate Director, Digital Strategy

Vizeum Interview conducted on November 12, 2014

Renee Whittingstall Partner, Digital Media Director

MediaCom USA Interview conducted on November 7, 2014

Rick Wion Executive Director

Manifest Social Interview conducted on October 28, 2014

RELATED EMARKETER REPORTS

Video Ads in Social Media: 11 Insights to Help You Make the Most of It

YouTube Advertising: Ins and Outs of Making It Work

Social Marketing Update: Eight Trends to Help Prepare for 2015

Facebook Advertising: Next Steps for Brand Advertisers

RELATED LINKS

A.T. Kearney

Adap.tv

Cisco

comScore

Cowen & Co.

Frank N. Magid Associates

GlobalWebIndex

Jefferies

JMP Securities

RBC

Socialbakers

TNS

Unruly

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, ReportsBen Clague Chart Data SpecialistJoanne DiCamillo Senior Production ArtistNoah Elkin Executive EditorStephanie Meyer Senior Production ArtistDana Hill Director of ProductionKris Oser Deputy Editorial DirectorEzra Palmer Editorial DirectorHeather Price Senior Copy EditorKatharine Ulrich Copy Editor

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