Peter Kafka

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Facebook’s Nonexistent Video Ads Could Be a $1 Billion Business Next Year

Facebook’s video ads don’t exist yet, but Morgan Stanley is already a buyer: Its analysts think the ads will be an instant hit, and could end up generating $1 billion for the company next year, commanding one percent of the U.S. TV ad budget.

And things will start getting really big by 2019, the bank predicts, when the ads will generate $5.5 billion a year.

Once again: Facebook’s videos ads, which were supposed to be out this summer and should likely appear this fall, have yet to appear. So Morgan Stanley is primarily basing its guesstimates on reports from Bloomberg and Ad Age, not by talking to advertisers about the ads’ performance. Which means that these projections are even more speculative than most projections are.

Still, analysts Scott Devitt, Jordan Monahan and John Egbert, who figure video ads could boost Facebook’s ad revenue by 12 percent next year, like the premise of the pitch: Advertisers spend a ton of money on TV, and they want to buy similar ads on the Web.

And the Web and Facebook are particularly attractive because they have lots of young eyeballs that are harder to find on TV these days: “These users remain the most desirable, yet most difficult, audiences for brand advertisers to reach at scale. Facebook’s guaranteed reach into the under-30 demographic may prove especially appealing to brand advertisers, and also justify premium pricing.”

Of course, that logic also means that advertisers are going to pour a ton of money into the giant site that already has lots of video ads. Morgan Stanley thinks Google’s YouTube will generate $5.7 billion in video ads next year, and $16.9 billion by 2019.

Morgan Stanley Facebook YouTube video ads

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