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Facebook Gets Going on Video

Mobile video ads could be another nice revenue stream


Yesterday, Facebook (FB) announced it would begin testing auto-play videos within newsfeeds, similar to Twitter’s Vine service. They will initially be available for the apps on Apple’s (AAPL) iPhone and Google’s (GOOG) Android platforms.

Inevitably, users have some concerns — mainly that Facebook will have yet another way to bombard us with ads.

But things might not be all that bad. Keep in mind that auto-play videos will only come from the people you friend or like on Facbook. They will also be in the silent mode unless a user taps the video (which will then post in full-screen view).

It seems inevitable that auto-play videos will host ads … but even that won’t necessarily cause users to flee.

Facebook has had little problems keeping up the growth rate of its users, even as it has ramped up its display ads. In a recent interview, Mark Zuckerberg noted that the social network gets a staggering 1.15 billion monthly users, and more than half of them log in every day.

In light of this scale, Facebook doesn’t have to flash very many ads to rake in large amounts of revenues. In fact, video ads tend to have higher click rates compared to traditional banners (which people just seem to ignore).

Besides, Facebook has the advantage of huge amounts of user data to provide more relevant pitches, which makes less likely that auto-play videos will somehow alienate its valuable user base.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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