Ahead of the announcement of Facebook Inc (NASDAQ:FB)’s Q2 financial results, Eden Zoller, principal consumer analyst at Ovum explains what Facebook Inc (NASDAQ:FB) must do as a matter of priority on its earnings call.

Below are the comments from Ovum on Facebook:


Facebook Inc (FB)’s video advertising strategy

What Facebook Inc (NASDAQ:FB) must do as a matter of priority on its Q2 earnings call is show that it has a clearly articulated video advertising strategy.  The key element of this is confirming when, exactly, we can expect the much anticipated video ads on News Feed and also the kind of features that such ads will support.  And given that Facebook has finally launched video on Instagram, we would also like guidance on how it intends to develop advertising on this platform, which currently lacks a monetisation model.

Announcement of video ads on News Feed

Video ads on News Feed were announced late last year and were meant to launch in H1 2013. Online video advertising is growing fast and Facebook Inc (NASDAQ:FB) clearly wants to tap into this revenue stream. The company has been touting the concept of its video ads to major brands and it is expected that the ads will carry a high premium.

Expectations for Q2 earnings

Expectations are mounting and if Facebook Inc (NASDAQ:FB) doesn’t announce a firm launch date in the Q2 earnings call, then it needs to make a convincing case for the continued delay, as the opportunity to generate revenues  from video ads on News Feed, at least for 2013, is starting to pass it by. In our view the most compelling explanation for further delay would be that Facebook Inc (NASDAQ:FB) is working hard behind the scenes to ensure its video ads are not disruptive and provide a good experience for users, as unless Facebook gets this right its video advertising will never fly.”