While the leading social networking service is having no problem growing its user base—it surpassed 2 billion monthly active users in June—it has been warning for some time that its revenue will slow in 2017 as the areas to place ads on its News Feed without compromising the experience for its legions of users has been maxed out. News Feed has been a huge revenue generator for the company, as all sorts of brands and marketers use it to access millions of consumers around the globe.
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As a result of its problem, Facebook over the last few months have been testing ad placements on different areas of its platform and Instagram, its photo sharing platform. According to a report in Recode, the company has started offering advertisers the ability to run ads in the middle of videos, which makes them seem more natural than at the start of a piece of content. It’s also a better placement than after the content is complete because users are more apt to stop watching. The social network is also reportedly funding video projects that could support these midroll ads. The report noted Facebook’s push into original content is also focused on giving advertisers a new place to get the word out about their products and services. (See also: Facebook Ad Revs Likely to Surprise for 2H17: CS.)
In addition to focusing on video content, the company has begun selling advertisements inside Instagram Stories, in Facebook Messenger and reportedly attended Cannes, the big ad conference in June, to tout its Messenger ads. Recode noted Facebook is also testing ads in Marketplace, which is its platform that lets people buy and sell used goods. The company is betting that one of these areas will be a huge hit like ads on News Feed has been, giving it more growth in online advertising where it and Alphabet Inc.’s (GOOG) Google dominate. The report noted that midroll ads present the biggest opportunity because they get Facebook access to huge TV ad budgets. (See also: Facebook Is Testing Paid Subscriptions: Report.)
Earlier this month Facebook announced it would begin selling advertising space across its Messaging service after testing it in Australia and Thailand. The plan is to begin with a small percentage of users. Marketing firms, which are expected to be keen to capitalize on this new opportunity to advertise products to Facebook Messenger's 1.2 billion monthly users, will be able to buy ads via the company's dedicated ad manager.