Facebook gives priority to longer videos on News Feed
Facebook is shifting its focus to long-form videos by ranking longer videos with higher completion rates more significantly on its News Feed. Publishers have largely focused on shorter “bite-sized” videos for the social media platform, but viewing of shorter videos may take a dip as a result of the new policy. Long-form videos are being featured more prominently to test mid-roll ads or ads that appear once viewers have watched at least 20 seconds of a clip and to test a video-only tab. Facebook is also seeking to attract TV advertisers and even to purchase exclusive shows.

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Facebook tweaked how it surfaces videos to users in its News Feed: longer videos with higher completion rates will now be ranked more prominently in the News Feed. As a side effect, shorter videos may see a dip in distribution on the News Feed.

Publishers stand to be gravely affected by this change in how Facebook ranks videos. Many publishers have specialized in short, bite-size video posts on Facebook. And although Facebook seems to be downplaying the potential impact of this News Feed update for publishers, the reality is that publishers will likely need to adapt to Facebook’s new preference for longer-form content.

Favoring long-form is the latest in Facebook’s strategy to capture lucrative TV ad dollars:

Testing mid-roll ads. Earlier this month, Facebook began testing mid-roll video ads that run in videos that are at least 90 seconds long. These ads are capped at 15 seconds, and can only appear after the user has watched at least 20 seconds of the video clip.

A new video-only tab. Facebook is testing currently testing a new video tab that, like YouTube, serves as a destination for pure play video. The feature is designed solely as a video portal, where users can search and discover videos they'd like to watch.

Buying exclusive shows. Facebook is reportedly looking to bankroll TV-like originals, entering into talks with studios and producers about licensing exclusive shows to Facebook. Ricky Van Veen, Facebook’s head of global creative strategy, is leading this effort.

Wooing TV advertisers. Facebook unveiled a tool last year that makes ad-buying on the platform more TV-like. Several months later, it commissioned a Nielsen study that showed Facebook ads reach an additional 5% of people who can’t be reached on TV.

Instant articles for TV. News emerged in October that Facebook was working on an Instant Articles-like product for broadcasters. Details remain scant, but Facebook has stressed that its intent to collaborate with media companies to build a mutually advantageous product.

Going “connected TV.” Also in October, Facebook enabled users to watch videos on the platform on connected TVs through Apple TV and Google Chromecast. The feature frames Facebook videos as content fit for TV, positioning the platform for success in the evolving TV ecosystem.

This algorithm update plays into Facebook’s plan to promote video on its platform. The company has made little secret of its ambition in this regard. In 2016, Nichola Mendelsohn, the company’s VP for EMEA, said that she expected Facebook to be all-video within five years, echoing similar comments by company CEO Mark Zuckerberg.

The US market for TV ad spend totaled close to $70 billion in 2015, according to PwC, with the big four national networks – CBS, FOX, ABC, and NBC – accounting for 58% of revenue. However, these companies are under increasing pressure as digital video platforms – such as Facebook, YouTube, and Snapchat – continue to draw in audiences.

These types of native ads — or ads that take on the look and feel of the content surrounding them — are taking over digital advertising.

By 2021, native display ad revenue in the US, which includes native in-feed ads on publisher properties and social platforms, will make up 74% of total US display ad revenue, up from a 56% share in 2016, according to new BI Intelligence estimates based off historical data from the Interactive Advertising Bureau (IAB) and PwC, as well as IHS.

The rapid uptick in native's share of display ad revenue can largely be attributed to the dominance of social platforms like Facebook and Twitter — which were early champions of native and rely almost entirely on native formats — as well as the introduction of new programmatic technologies that are making it easier for publishers and advertisers to scale native campaigns.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on native advertising that breaks out native ads into three categories: social native, native-style display, and sponsored content (also referred to as premium native). It provides forecasts for how revenues from these formats will grow over the next five years and looks at what factors, in particular, are driving up spending on each of these ad units. As a note, because revenues from these three types of native content can overlap, it does not provide an overall native forecast. Finally, it lays out some of the challenges that face properties that rely on native ads, namely ad frequency and scalability issues.

Here are some key takeaways from the report:

Native-display ads, including social native and native ads in-feed on publisher websites, will make up the bulk of native ad revenue from 2016-2021. Native display ad revenue in the US will rise at a five-year compound annual growth rate (CAGR) of 17% during this time period to eclipse $36 billion. The rise of native video ads, particularly on social platforms, will be one of the main drivers of this growth.

Social platforms generate most of their revenue from native ads and will continue to dominate overall native ad spending through 2021. The dominance of social platforms like Facebook, Instagram, Twitter, and Snapchat on mobile devices, where the entire experience is within a feed, will help propel social's contribution to overall native ad revenue through 2021.

Sponsored content, which is categorized separately from native-display due to the direct relationship between publishers and brands in creating the format, will be the fastest-growing native format over the next five years. However, the high cost to produce these ads and the limitation in inventory will limit the format.

In full, the report:

Forecasts US native ad revenue growth from 2016-2021 through three separate forecasts: native-style display, social, and sponsored content.

Identifies the major drivers of native ad revenue growth.

Discusses key players within each category that are contributing to the rise of native.

Presents some of the challenges of wide-spread native adoption with BuzzFeed as a prime example.

Lays out future opportunities for native ads, including virtual reality, messaging apps, and TV.

To get your copy of this invaluable guide, choose one of these options:

START A MEMBERSHIP Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of native advertising.