Could Netflix Take Ad Business From Facebook?

The explosive growth of TikTok is an obvious threat to social media platforms. But Facebook may not be one of them.

That's because Facebook may have more problems with another strong media player: Netflix.

By the end of the year the big subscription video-on-demand platform will move aggressively into advertising -- which, according to one investor/analyst, called Moe Value Picks, could affect Facebook business down the line -- specifically one central Facebook growing business: Reels, the short-form video platform.

Mark Zuckerberg, chief executive officer of Meta Platforms, owner of Facebook and Instagram, said recently on an earnings phone call: “Our work on ads monetization efficiency for Reels is actually making faster progress than we'd expected. We've now crossed a $1 billion annual revenue run rate for Reels ads.”

But this may be the more interesting part: Reels, a growing competitive product, might be taking away business from Facebook’s two main other areas: Feed and Stories.



One might think short-form video is not nearly the same as premium video content -- full TV series and movies -- on Netflix. But consider many advertisers are looking across all video borders and definitions -- even adding YouTube the the mix, when it comes to placing media schedules.

In that context, it's not just big brand advertisers, but even mid-level advertisers on Facebook that could be swayed to consider other and perhaps more “premium” TV/movie content.

This is where Netflix comes in.

If that isn't all, consider the obvious business, consumer and public policy criticism of Facebook -- the plague on social media that comes with fake news, misleading or manipulative content.

Small and mid-size marketers are Facebook’s core business clients. And some of those marketers have seen growth to the point of evolving into “digital first” advertisers, those who moved into some traditional media platforms like linear TV and/or premium ad-supported streaming services.

A small group of these companies might be among the first digital-side marketers -- factoring in price considerations -- to test out what Netflix has to offer.

1 comment about "Could Netflix Take Ad Business From Facebook?".
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  1. Ed Papazian from Media Dynamics Inc, September 22, 2022 at 10:30 a.m.

    Interesting question, Wayne. And the answer is sure---especially from local and regional advertisers. But not until Netflix gets its AVOD subscriber  base way up from the current, very modest levels it is now forcasting for its first year and, probably, the next year as well. At 40 million individual "viewers" worldwide, we're talking about a mere 15 million subs with a much smaller total for the U.S. Year One. That's hardly likely to impacf FB's ad sales in a big way---it's just too small an audience delivery system.

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