Promote and profit is the name of the game at Facebook (NASDAQ:FB). Shares of the social network jumped about 1 percent in early trading on Tuesday following the announcement of promoted videos, a feature that will allow advertisers to place videos directly into the News Feed. The video content — the rollout of which will be monopolized by Summit Entertainment’s upcoming film Divergent — will play automatically, with audio following only if a user clicks or taps on the video.
The reaction to the announcement was immediate, and much of it was negative. Facebook has a dual mandate, commanding service both to users and marketers whose wants and needs are often at odds. Facebook is like an alchemist, working up a concoction of trial, error, instinct, and innovation (all the ingredients necessary for social and software engineering) that will satisfy the tastes of both users and markets.
Users want a clean, clutter-free experience; marketers want their advertisements target to as many likely customers as possible. Somewhere in the middle is the opportunity to facilitate interactions between users and businesses, and promoted videos are Facebook’s latest attempt.
Whether promoted videos are a recipe for success or failure remains to be seen. The data are hardly conclusive, but a quick opinion poll conducted by Yahoo Finance’s Hot Stock Minute showed more negative sentiment than positive. The perception among many is that the video ads will undermine the user experience by inviting what amounts to an unwelcome guest into a user’s Timeline.
An important thing to keep in mind is that — at least at first — sponsored videos won’t be targeted. The rollout will carpet bomb all Facebook users with the same trailer for Divergent. The value for marketers here is reach, and they are reportedly paying dearly for it. Such a video campaign costs as much as $2 million per day for a clip as short as 15 seconds.
At the end of the day, video ads looked like a step that Facebook would inevitably have to take, at least experimentally. There is clearly big money to be made if the user base can tolerate further commercialization of the social network.
Facebook touched a fresh 52-week high of $52.18 per share in early trading on Tuesday following the announcement.
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