Morgan Stanley: Facebook's Video Ad Revenue to Reach $1 Billion Next Year
August 9, according to foreign media reports, despite the fact that social network Facebook has not yet launched video advertising services, analysts at investment bank Morgan Stanley believe that once Facebook's video ad service goes live, it will immediately have an impact. They project that next year it will generate $1 billion in revenue for the company, allowing Facebook to capture 1% of the U.S. television advertising budget.
Analysts at Morgan Stanley further predict that by 2019, Facebook's video ad business revenue will reach $5.5 billion. It should be noted that Facebook's video ad service, which was expected to appear this summer or perhaps in the fall, is still nowhere to be seen. Morgan Stanley’s speculations on this issue are based on related reports from Bloomberg and *Ad Age*, without any discussions with advertisers regarding the performance of Facebook's video ads. This means that compared to most predictions, Morgan Stanley's forecast about Facebook's video ad business is more speculative.
Morgan Stanley analysts Scott Devitt, Jordan Monahan, and John Egbert estimate that video ad revenue will increase Facebook's total ad revenue by 12% next year. However, this is contingent on businesses investing heavily in TV ads and also wanting to purchase similar ads online.
The internet and Facebook are highly attractive to advertisers because they can capture the attention of younger audiences who don't watch much TV. Analysts at Morgan Stanley believe, "Young people have always been the hardest but most desirable audience for advertisers. Facebook's user base is predominantly under 30 years old, making it particularly appealing to brand advertisers, who are willing to pay a premium for these ads."
Of course, the logic behind this suggests that advertisers will also invest substantial advertising budgets into video websites. Analysts at Morgan Stanley believe that YouTube, Google's video site, will generate $5.7 billion in video ad revenue next year and reach $16.9 billion by 2019.