Six months in, Facebook’s test of mid-roll ad breaks within live and on-demand videos is driving scant revenue for publishers.

Five publishers participating in Facebook’s mid-roll ads test, which began in March, said the product isn’t generating much money. One publisher said its Facebook-monetized videos had an average CPM of 15 cents. A second publisher, which calculated ad rates based on video views that lasted long enough to reach the ad break, said the average CPM for its mid-rolls is 75 cents. (Facebook’s mid-roll ads don’t show up inside videos in the first 20 seconds, which means many three-second video views aren’t “monetized views.”)

A third publisher made roughly $500 from more than 20 million total video views on that page in September.* (This publisher had not calculated its CPM, as its total video view count includes videos that were not monetized by Facebook mid-rolls.) A fourth publisher confirmed revenue was low without giving specifics. (A fifth publisher, when asked about its Facebook mid-roll CPMs, responded by texting lyrics to Flo Rida’s “Low.”)

All six publishers Digiday interviewed for this story generate hundreds of millions of views per month on Facebook.

“They are paying literal pennies in CPMs,” said the first publishing source. “They are only paying if a view gets to the 20-second mark and the user consumes the ad. But if Facebook is counting views at 3 seconds, the majority of the views are not going to quality. If you got a million views on a piece of content, maybe 100,000 of them would actually get to the mid-roll.”

Facebook’s CPMs for its ad breaks are industry competitive, according to a Facebook source.

Facebook declined to comment on the record.

There’s some difficulty in assessing how many video views are being monetized by Facebook mid-rolls, which can account for the discrepancy between the CPMs calculated by publishers and the CPMs at which Facebook is pricing and selling its mid-roll ads. Facebook’s Insights panel tells publishers how much revenue they’re making on a daily, weekly and monthly basis, as well as how much revenue individual videos are bringing in. But it’s unclear how many of the video views are monetized since it’s not entirely certain how often Facebook runs the mid-roll ads on an individual video. This forces publishers to manually calculate inexact CPMs. The fact still remains: Revenue is low.

Using a spreadsheet delivered through Dropbox, Facebook also provides publishing partners with raw data on its mid-roll test, which includes information such as the total number of videos that were monetized, according to publishing sources. In one of these reports that Digiday reviewed, Facebook did not appear to say how much money these videos were making or how many views were monetized, a data point that rival YouTube provides.

“We have about a couple dozen videos that are actually getting monetized, but it’s tough to pick out which videos had the ad breaks and make sense of all the data,” said the third publishing source.

Some of this will get easier soon as Facebook plans to offer a CPM metric in the coming weeks or months, according to a source familiar with Facebook’s plans.

Facebook’s mid-roll test itself is still in its testing phase, which helps explain the limited results these publishers are seeing so far. According to one publishing source, Facebook tests every eligible video by running ads to a small set of users. In this test, only videos that successfully get 70 percent of users to watch through the ad breaks will get monetized more broadly, which means only a small number of videos are getting monetized. Facebook denied this practice.

One challenge is that Facebook News Feed video is not the best format for mid-roll ads. Users are typically scrolling by, which means many don’t even get to the ad break, and for those that do, an ad break is enough to convince them to move on to the next post in the News Feed, publishing sources argued. Naturally, it’s causing frustration.

“[News Feed video] is a terrible format; it’s a bad user experience because everyone abandons once the ad hits,” said the first publishing source.

Not all publishers are down on the mid-roll ads test. As Digiday previously reported, distributed-media publishers that have a lot of scale on Facebook are seeing more revenue. In a previous example, one publisher said a video with 24 million three-second views was able to bring in $11,000 after Facebook’s 45 percent cut — which is still only a net 46-cent CPM.

A sixth publishing source also claimed that while there was a “significant dip” in CPMs a few months after Facebook started testing mid-roll ads — likely due to more publishers being invited into the program — revenue has started to pick back up in the last month or so. “It seems to be correcting in a positive direction,” said this source.

Part of the frustrations these mid-roll publishers have goes back to the revenue-sharing terms Facebook made with them to license their video in the first place. These publishers are getting paid licensing fees by Facebook to produce a minimum number of video minutes per month. Under these deals, Facebook keeps all of the ad revenue it makes from the mid-roll ads until it recoups the licensing fees, after which Facebook would take 45 cents of every additional dollar made. Facebook’s funding of original shows for Watch comes with similar terms.

If Facebook mid-rolls are bringing in a low CPM, it means publishing partners are even more unlikely to see any additional dollars for their content anytime soon.



It’s not all doom and gloom. Some publishers are optimistic about the possibilities of mid-roll ads in Watch. Since Facebook is incentivizing publishers to produce longer videos and is funding longer-form shows for Watch, the thinking is that the fledgling video-viewing section could create an environment where mid-roll ads can work.

When Facebook unveiled Watch in August, the company said it will experiment with mid-roll ads inside Watch with a limited set of partners, with plans to expand that to more partners and shows over time.

“What Facebook has to figure out is how to get enough viewership so that — whether it’s mid-rolls, pre-rolls or a straight licensing fee — there’s enough money on the table for both Facebook and publishers,” said the second publishing source. “I think they’re on the right track with Watch, which is about creating artificial scarcity.”

But even with Watch, Facebook eventually wants to move to an ad revenue-sharing model instead of having to fund the content itself. That might not be great for publishers because the revenue would be less certain. As the second publishing source wondered aloud: “It’s an interesting universe a year from now if Facebook is not priming the pump for publishers, and enough publishers make the decision that there’s no economic value in publishing to Facebook.”

Correction: A typo in an earlier version of this story said the third publisher made roughly $500 from a million video views in September; it was actually more than 20 million video views.