Facebook gaining ground on YouTube in video ads, report says

By Eric Auchard and Leila Abboud

FRANKFURT/PARIS, June 22 (Reuters) - Facebook isgaining ground on Google's YouTube as an outlet forbig companies to market their products via online videos, thefastest growing category of Internet ads, a report published onMonday said.

The competition for video viewers opens up a new front inthe clash between the two web giants that already compete inother types of advertising given their appeal to young and international consumers, Ampere Analysis said in a study.

London-based Ampere predicts a new advertising "arms race"between the two rivals, neck and neck in terms of audience sizeswith around 1.4 billion to 1.3 billion monthly active users,respectively for Facebook and YouTube. That means consumers arelikely to be forced to see more ads, but also enjoy a richerrange of video programming as a result, it said.

The Internet will overtake TV advertising in 12 key markets,representing 28 percent of global ad spending by 2017, separateresearch by media-buying firm ZenithOptimedia said on Monday. Ad spending is projected to reach $531 billion this year.

Online video is now growing faster than any other digitalcategory or subcategory, rising 33 percent in 2014, and isforecast to grow 29 percent a year through 2017, Zenith said.

The two reports were released as the week-long Cannes Lionsinternational advertising conference opens this week.

Ampere Analysis argues that Facebook is morphing from aplatform most advertisers use for building general brandawareness to one that can deliver "pre-roll" advertisements thatmarketing companies prefer for ensuring their messages areactually viewed.

Currently, YouTube remains a more flexible marketingplatform, offering advertisers the full range of video ads whichrun before, during or after a video programme is shown.

"If the social network's own video ambitions are to berealised, and if it is to convince content owners it is a viablealternative to YouTube, it must deliver comparable returns,"Ampere Research Director Richard Broughton said.

Differences in ad formats translate into the rates theInternet platforms can charge advertisers. While YouTube chargesadvertisers when an advertisement has been viewed, Facebookoffers the less advertiser-friendly model of charging once threeseconds of the video have been delivered, Ampere noted.

Most content providers now use Facebook for branding andawareness purposes, but trial revenue-sharing deals with theNational Football League and Fox Sports in the United Statespose a serious challenger to YouTube's lead, said Ampere, aresearch firm that serves media companies and investment banks. (Editing by Keith Weir)