Facebook's Monetization Road Is Paved With Videos

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March 13 (Bloomberg) –- Bloomberg’s Cory Johnson and Edmund Lee discuss Facebook’s road to monetization with Trish Regan on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

How is this going to look?

It will be these little clips that when you scroll through your news feed, you will see them playing, but you will not hear them.

They do not want to intrude on your newsfeed too much.

You will start to hear the audio along with a 15 second spot.

These things are not coming cheap.

What are they going to charge for an advertisement that is a video?

1.5, $2 million?

They are trying to set a fixed price and advertisers will say, we will pay for an excess of an ad.

What we have seen from advertising online is that whenever advertising can be measured, the price per user is going down.

That has been horrible news, not just for the companies that want to base the revenue model based on online ads.

You have the opportunity to target so directly to the consumer that you want.

Isn't this a huge opportunity for advertisers and companies alike?

Absolutely.

That will be the major factor in terms of hitting a super bowl sized audience every day.

They are hoping for the best, but reising will change a stone performance -- pricing will change based on performance.

This is designed for the big-ticket advertisers.

A movie is opening on friday and they want to hit everybody on wednesday and thursday.

That is part of the game.

Facebook wants them to come to them instead of cbs or nbc.

This is a major transition have a huge shift in the ad industry.

What do you think?

Is this going to be the model?

Every time advertising has gone online and you can measure the clicks, the value went down.

This might ultimately be news for broadcast television.

I do not think it is going to be about super bowl audience.

It will be about the targeted advertising and it will be about taking that media away from the places where it is right now.

We have seen that in some cases on facebook rid large.

--writ large.

If you are a car dealer and you can reach the people you want to at a lower rate, you will do it.

If you want to reach a certain demographic and suddenly, you have the promise of reaching a demographic in a way you could have never guaranteed before, that advertising should be worth more.

You would think so.

It has not worked out that way.

It is a bizarre phenomenon where there is a lot more available inventory online.

There is this programmatic -- machine to machine biting words you have these programs, buying them at cheaper rates.

Because human elements are taken out of it, prices tend to go down.

Facebook has taken themselves out of the equation.

You have to go directly to facebook for that type of stuff.

The commoditization, so to speak?

They are trying to keep themselves out of the game a little bit.

You did not know who you were getting so you try to get near the people you were getting at.

What facebook has the potential to do that you do not do -- men between the age of 25 and 40 who might be owning a car sometime in the near future.

You can find people who are looking for a car.

Again, i think that would be worth more money.

Once you slice the demographic down that thin, it is fewer of them.

We will charge $2 million a day for one of these video ads, are they changing the process?

Them.

They are trying to nab more tv dollars.

You cannot these by ads -- you cannot buy these ads on a super slice down basis.

It will be age and gender only.

They will sell it like tv ads are sold.

Age and gender, that is it.

By doing that, you are losing the very thing you have, which is the ability to target so specifically.

The amount of money spent on tv advertising this year, 66 billion.

Internet advertising, 43 billion.

We will be watching it.

Cory johnson, thank you.

Alix steel is covering for pimm

This text has been automatically generated. It may not be 100% accurate.

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