Facebook Inc (NASDAQ:FB) is one of the most important parts of web infrastructure, and that’s one of the reasons the stock has done so well this year. The reigning narrative is that New Media will inevitably win against older forms, but that may be worth a second look. A report from Pivotal research takes a look at the market and comes to some interesting conclusions.
Facebook Inc (NASDAQ:FB) is getting into video. The company’s highly anticipated (by investors rather than users) video ads are supposed to be the next big boost for revenue at the company. Video advertisement is still the most important part of the advertisement industry, and Facebook Inc (NASDAQ:FB) wants to be part of the most valuable area. It’s not that easy according to Pivotal analyst Brian Wieser.
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Television isn’t going away
The report form Pivotal takes its beginnings from a recent Nielsen report that compared television to web video. Though both forms have very similar attributes, they are not the same thing, and the Nielsen report demonstrated that candidly. Television is still the most important medium, and it’s not changing any time soon.
The report found very clearly that Television is watched by far more people than web video content in the United States, and television is watched by a much broader selection of the population. Nilsen’s online video viewing numbers amounted to 2.3 percent of total TV viewing numbers.
The total number of Americans watching online video is likely to increase as the medium becomes more widely known and data speeds up, but the demographics will not change that quickly. People who are not used to online content are not going to substitute it from television very quickly. The report found that even heavy watchers of online video watch much more video content.
Facebook and video advertising
There are a huge amount of problems for Facebook Inc (NASDAQ:FB) as it tries to break into video advertising. The number one priority remains styling the ads so that users aren’t alienated, but the value of the online video market may not be as big as the company thinks in the first place.
Online video ads are everywhere, as it is a very competitive market. Leaders like Youtube have been working with the format for a long time, but they’ve still not managed to make it pay as much as investors want. Facebook Inc (NASDAQ:FB) is aiming for a big part of market that’s much smaller than previously thought.