YouTube plays down threat in video advertising from Facebook, says there is room for both

YouTube has downplayed the threat of Facebook displacing its dominance of online video, saying both companies will be able to grow rapidly for years by cannibalizing the television advertising market.
Facebook on Thursday has confirmed that it is dabbling in video ads and sharing revenue with content creators, in a move that would compete with Google-owned YouTube.

An advertising model being tested by the leading online social network is part of a “Suggested Videos” feature designed to recommend clips for people based on snippets they tune into in News Feed at Facebook.

Robert Kyncl, head of content and business operations at YouTube, told the Financial Times the online video market was expanding so fast that “it will be a decade before we bump into each other”.
The arrival into the market of Facebook, disappearing-messages app Snapchat and Twitter’s video app Vine is a sign that online video is “becoming mainstream”, but none of them would derail the YouTube juggernaut, he said.

“We’re running a new suggested videos test, which helps people to discover more videos similar to the ones they enjoy,” a Facebook spokesperson said in an email reply to an AFP inquiry.

“Within suggested videos, we will be running a monetization test where we will show feed-style video ads and share revenue with a group of media companies and video creators.”

Facebook has claimed an audience of more than 1.4 billion people around the world, and has been adapting to a trend of members increasingly accessing the social network from smartphones or tablets instead of laptop or desktop computers, has been putting video ads into users’ feeds for more than a year.

Revenue from ads appearing in the Suggested Videos feed will be shared, with 55 percent of the money going to those providing the content, according to Facebook.

The California-based social network said that it is not taking money in any from of advertisement while it tinkers with the formula for serving up video marketing messages.

Industry tracker eMarketer has forecast that the amount of money spent on video ads in the United States this year would hit up to $7.77 billion (roughly Rs. 48,821 crores), growing slightly more than a third from the $5.81 billion (roughly Rs. 36,845 crores) spent in 2014.

Online video sharing powerhouse YouTube takes a lion’s share of ad revenue, bringing in $7.6 billion (roughly Rs. 48,202 crores) in gross revenue last year, according to eMarketer.

YouTube’s share of the video ad market was predicted to rise to 25 percent, with the Silicon Valley Company taking in $9.5 billion (roughly Rs. 60,242 crores) globally this year. YouTube splits ad revenue with content creators.

On Wednesday it muscled further into YouTube’s territory with a trial to share advertising revenue with video creators who publish on the social network.

Speaking before Facebook’s announcement, Mr Kyncl predicted that YouTube and its rivals would have plenty of room to grow as advertisers continue to shift their budgets away from traditional media.

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