Facebook's Sheryl Sandberg just said something that should terrify TV executives

Video views on Facebook are growing exponentially. Some 4 billion videos are watched on the platform every day, up from 3 billion in January, the company revealed in its Q1 earnings. Video ads on Facebook are growing ridiculously fast too (although Facebook stayed mum on how many of those 4 billion videos are ads, or have video ads served against them.)

Many people might think that those numbers serve only to worry rival video platforms like YouTube. But TV executives should be looking over their shoulders too.

There was one line in particular in Facebook’s Q1 earnings call that TV executives should be paying attention to.

Sheryl Sandberg, Facebook chief operating officer, said:

I think all marketers have the opportunity to do video, and that’s pretty exciting, including SMBs [small-to-medium businesses] who would never be able to hire a film crew and buy a TV ad. We’re seeing those put video in. Over 1 million SMBs have posted videos and done really small ad buys around them. And that’s pretty cool because I don’t think there are probably 1 million advertisers who have bought TV ads in that same period of time.

Pretty cool, huh? Advertisers that can’t afford TV can create TV-like ads, for a fraction of the price, and still reach a huge TV-like audience. Or a smaller, more-targeted one if they choose. Perhaps, when they grow into large businesses, they might leapfrog TV advertising altogether.

Facebook also spoke about the other tools it is offering SMB marketers. Sandberg mentioned that last quarter Facebook began a small test to allow some SMBs in the US to affix a “buy” button to their Pages. That’s a direct link TV doesn’t offer.

And Facebook is heavily investing in the measurement side of advertising, using conversion tracking technology. Marketers can (if they pay a little extra) find out whether someone who saw a Facebook ad went on to buy a product.

Sandberg explained:

So conversion tracking is increasingly used, and we work with our marketers to use it even more, and we’re also really excited about Conversion Lift because that’s the first product we’ve had which scientifically measures the additional business you get from Facebook ads. It compares test groups that see ads with control groups that don’t. So, whatever you’re measuring in terms of conversions, whether it’s sales, or website clicks, or registrations, we can A/B test and see exactly what the impact Facebook has.

It’s those extra tools, presented to marketers in a simple format as Facebook so expertly does, that could give it an edge over TV for those businesses that are new to advertising. That could tempt them away from TV altogether. And if they do opt for TV, they’re likely to buy Facebook ads around those 30-second TV spots too, to amplify their spend (and perhaps do that as an alternative to buying more TV time.)

While video advertising on Facebook (and beyond) is exploding, it still represents just a fraction of marketers’ spend to date. Sandberg said:

But even for the largest clients we have, we are a very small part of their budget. I don’t think we have any large clients, if you look at 25% in the US of consumer media time is on mobile, and then 20% of mobile time goes to Facebook and Instagram that would be 5% of US consumer media time. With our largest clients, even our large ones, we’re not close to 5% of their spend. And so I think we have a considerable opportunity to grow, and we also expect those underlying numbers time on mobile to continue to grow.

That’s also evident in overall ad spend figures. Data released by the Interactive Advertising Bureau (IAB), compiled by PwC, showed that internet advertising still has a long way to go to catch up to TV advertising. Internet ad revenues in the US grew 16% year-on-year to $US49.5 billion in 2014, while ad spend on broadcast and cable TV combined was at $US65.7 billion in the period.


That said, combined cable and broadcast TV spend fell 12% in 2014, while internet ad spend grew 16% year on year — there is some cross-over, however: TV companies sell internet ads too.

But TV advertising, while still more expensive than other forms of advertising — particularly most forms of digital such as banners and mobile — does still tend to reap rewards for marketers. It’s a longer-tail game: People that see a TV ad don’t usually immediately click to buy the product or pick up the phone to change their insurance provider — but over time it is a branding tool that lifts awareness, affinity, recall, and other metrics.

There is also some evidence that TV remains the most effective ad medium. A UK econometric study from Ebiquity, commissioned by UK TV marketing body Thinkbox, found that every £1 spent on TV advertising generates £1.79 in profit, far ahead of the next most effective medium, radio.

That said, Facebook has made it clear that it is building out the tools for businesses not only to buy more advertising on its platform versus TV, but to measure Facebook ads’ effectiveness versus TV too. And that should worry TV executives right now.

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