According to the Bloomberg report, Facebook will start offering "TV-style" 15-second commercials to advertisers for up to $2.5 million a pop later this year.
Think about it. Over one billion total users. About 800 million checking in monthly on a mobile device. Roughly half a billion daily. At first brush, you think traditional television cannot compete. That's not entirely true. But if Facebook does this and has even modest success, it could be a game changer nonetheless.
For some types of Facebook advertising, you really don't need to spend a ton of money.As an example, I buy promoted posts and sponsored stories for TheStreet's Facebook page. At a certain point, engagement such as social sharing takes over and provides value in lieu of spending more money. Simply put, I have heard of brands spending five or six figures per promoted post/sponsored story. That makes no sense when you can achieve considerable organic growth triggered by a relatively small expenditure. However, with a TV-style commercial, it's a different ball game. It's taking a traditional advertising concept -- the television spot -- and putting it to work on a platform with massive scale and (depending on who you ask) impressive engagement. In some respects, this is like advertising on the Super Bowl any day of the year. Consider the numbers. Last year, roughly 108 million Americans watched the Super Bowl. The National Football League routinely makes the claim that the game is "available to an estimated worldwide audience of 750 million to 1 billion people." However, research shows that nowhere near that number watch the game. In fact, a vast majority of viewing happens inside North America with a relatively small portion coming from abroad. As such we might be looking at something closer to 110 to 120 million viewers worldwide this past January. From a pure numbers standpoint, an advertisement for $2.5 million on Facebook could, theoretically, get in front of more people than the $4 million companies spend on a 30-second Super Bowl spot. But "get in front of" are the keywords. Which audience is more engaged? Some people tune into the Super Bowl just to see the commercials. That's why you drop the $4 million; you have an audience longing to see your advertising for a change. At the moment, many users view Facebook ads as an intrusion. That doesn't mean they will not work or they're not valuable. In fact, for some companies, by some measures, a Facebook ad will be just as powerful -- and maybe more so -- than a Super Bowl ad. All of that to say, yes, Facebook has something here. It could be a game changer, however, be skeptical if the tech/financial media starts putting out "Super Bowl Killer" or "Network Television Killer" headlines in regards to the possibility of Facebook TV commercials. You know they'll do this just the way they refer to Apple's (AAPL) iTunes Radio as a Pandora (P) killer or Google's (GOOG) Chromecast dongle as an Apple TV or Roku killer. That's premature and overhyped. Something else to keep in mind. Traditional television platforms continue to mature digitally. As these digital and mobile strategies grow and evolve, big media will command higher rates for advertising, particularly if they can sell it across a set of platforms that includes actual television sets. That's something, at the moment, Facebook cannot do. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.
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