Bloomberg is reporting that Facebook is planning to introduce 15-second “TV-style commercials” to its News Feed later this year as a new revenue stream for its social networking service.
The video ads are said to cost between $1 million to $2.5 million per day. Ad Age reported in April that Facebook was shopping the new advertising product around to agencies in hopes of running the first spots this summer.
Facebook impressed investors last week with solid results for its second quarter. Mobile advertising in particular surged, rising to 41 percent of overall ad revenue, or $656 million, during the period.
Assuming the $2.5 million per day price is accurate, the new ads would create an immediate boost for Facebook’s bottom line. Considering that the company brought in $1.81 billion in revenue during the second quarter of 2013, a quarter worth of commercials at the highest price could hypothetically drive over 12 percent growth by adding as much as $225 million in revenue.
As of June, Facebook had over 1.15 billion monthly active users, 819 of which are on mobile, and 699 million daily active users.
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Facebook’s efforts to dive into the video commercial business have been dubbed a “TV killer” by some. Notably, Facebook COO Sheryl Sandberg revealed during last week’s earnings conference call that as many as 100 million users are on the site during primetime TV hours.
Shares of Facebook jumped over 6 percent on Tuesday, driving the stock closer to passing its IPO price of $38 from last May.
Photo credit: Manjunath Kiran/AFP/Getty Images
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