Google and Facebook quietly arm up for a raid on the video advertising market

By James Robinson , written on June 10, 2014

From The News Desk

TV advertising was worth about $74 billion in the US last yearIts biggest competition? Mostly, itself.

As the online video advertising market takes shape, large chunks of the current broadcasting advertising marketing represent a big prize in waiting for online advertisers, especially for sites like Facebook and YouTube (and all of Google by proxy) that can boast an active, mobile, round-the-clock audience.

Still, the relatively meager $4 billion online video advertising market in the US is fragmented. YouTube is a big name but with only 20 percent of the market cornered, it lags behind AOL and several of the major ad exchanges. Facebook’s video ad business was nonexistent until recently, but is ramping up quickly.

So it's little surprise that last week Facebook and Google quietly added to their stockade of video advertising tools. The online video market is expected to tick up to $6 billion this year, but if either company manages to put its full scale and massive advertising real estate behind the right solution, major lift-off could happen much sooner.

Google already announced its “Preferred” program for YouTube earlier this year, allowing advertisers to place ads just on the top five percent of content producers. But last week it went for the jugular s little more with ‘Partner Select,’ its own video-exchange to compete with all the smaller upstarts that keep showing it up. It is essentially an automated, real time market for ads both on YouTube and on select – but still to be announced – partnering websites. It allows it to sell more ads on YouTube, while also expanding its footprint across the web itself.

Facebook’s tweaks last week were milder, but no less key. Analysts have long forecast that the company could do $1 billion in video ad business in 2014. Its blockbuster $500 deal with Publicis included a large but unspecified video component. Most of its appeal with video so far has been to large companies like Coca-Cola, who are more concerned with mass brand appeal than targeting specific audiences. So to counter that, it rolled out a targeted ‘video views’ feature, allowing advertisers with small budgets to target specific audiences within Facebook.

Old world broadcast advertising offers none of the targeted benefits Facebook or YouTube can, but still exists without drastic competition. Traditional networks should be starting to shift in their seats, slightly.

It might be a while before Facebook and NBC are going head-to-head for ad spend. But look how well putting your head in the sand worked out for newspapers.

[animated gif by Brad Jonas for Pando]