Facebook Inc (NASDAQ:FB) has made several attempts to improve engagement and increase its advertising revenues. The company, according to one Hillside Partners analyst, is getting ready to introduce a feature that could split its user base. A report, authored by Rory Maher of Hillside, speculated that Facebook could introduce Video ads as early as Summer 2013.
In recent months, the Menlo park firm has introduced several new platforms that could increase the reach of its advertising power. The most notable of these, according to analysts, is the firm’s social graph platform. That feature is expected to augment the experience of users, and add to the company’s advertising revenues.
The firm has also experimented with several other revenue streams. Last year, Facebook Inc (NASDAQ:FB) introduced sponsored posts. That feature allows users to pay in order to get their voices heard. A similar feature, sponsored stories, which allows advertisers to use users’ details to promote their product, was controversial among users. Video ads might be the same.
Facebook is a careful company and it has done its best to avoid widespread conflict with its user base, particularly in advertising. If the firm’s video ads are too intrusive they might drive off some of the company’s users. Video ads, particularly the “pushed variety,” are not popular with users.
Facebook seems to be in testing right now, and it is likely they will do their best to limit the intrusiveness of the video advertisements. A reduction in intrusiveness means that less people will see the advertisements, however, that, in general, means that lower revenue results from those ads.
Rich media, the use of video and other more complex and engaging advertising methods, is becoming increasingly popular for Web advertisers, and Facebook cannot afford to fall behind. Google Inc (NASDAQ:GOOG) is the leader in this, as in most online advertising, with its Youtube Video sharing platform.
The future of advertising seem to be in rich media, and Facebook needs to get ahead of the pack in order to show its value to advertisers. Right now, in a lot of ways, it’s still catching up to Google Inc (NASDAQ:GOOG). That needs to change in the years ahead.
Facebook Inc (NASDAQ:FB) shares fell by a fraction in today’s trading. So far this year, the company’s shares have increased by just over 1.5%.
