Facebook likes idea of boosting its bottom line with video ads
NEW YORK — Investors are giving a thumbs-up to the idea of Facebook making hundreds of millions in new revenue from video advertisements, but some users argue that the social network is already too cluttered and has become more about commercialism than communing with friends.
Facebook said Tuesday it's testing video advertisements that show up in its users' news feeds. As part of the test, Facebook said some of its users on Thursday will see a series of videos teasing Summit Entertainment's upcoming release of “Divergent,” a film based on a young adult novel with the same name, in their feeds.
The Menlo Park, Calif.-based company wouldn't disclose pricing, but said its goal for the test feature is to make a premium advertising product used to reach large audiences at specific times.
Facebook's shares, which have posted substantial gains over the past four months, hit an all-time high of $55.18 on the news, before closing up $1.05, or 2 percent, at $54.86.
Citi analyst Mark May backed his “buy” rating for Facebook's stock on Tuesday, noting that the video advertising effort could add more than half a billion dollars to the company's revenue next year and up to $1 billion by 2016.