Facebook v. YouTube - Who Wins? 5 Part Test

At long last, just last week in time for the 4th of July holiday -- and in YouTube's own backyard -- Facebook shot off its video monetization fireworks, revealing for the first time how it planned to monetize its massively growing video business (and how video creators would share in it).  We already knew that Facebook video had become the first real threat to YouTube's dominance (a topic that I have previously explored) -- already crossing the "4 billion video views per day" threshold.  But, the rest was a mystery.

Well, mystery no longer (at least for the initial incarnation of Facebook video monetization efforts).  For a certain sub-set of its base (since these initial efforts are smartly an "experiment" in these early days), Facebook will now run auto-play ad interstitials in "suggested videos."  And, in what I find to be a bit of a surprise, it will split ad revenues 55/45 with creators a la YouTube (rather than give creators a higher split for, if nothing else, goodwill and PR -- remember, YouTube has been pilloried in the press about its 55/45 split).

So, what do I think about Facebook v. YouTube in this epic battle between the new mega-Challenger and the long-time Champ?  Which company has what advantage (and disadvantage) in the quest to be the most compelling home for video?  And, is it a "zero sum game" with one winner and one loser -- or does the entire industry "win"?

5 Part Test -- Advantage Who?:

(1) YouTube video is still the #1 "must publish" video platform and destination.

YouTube remains dominant, having crossed Facebook's "4 billion videos per day" threshold back in 2012.  Most creators still think, "you just gotta be there."  But, Facebook video is young (very young) and its growth has been explosive -- as has been overall creator and marketer excitement about the Challenger.  As one example, TV networks like HBO have now begun to sample their shows on Facebook "to leverage the massive reach of of their platform" (in the words of Jim Marsh, vice president of digital and social media) -- something that previously was virtually unthinkable in the YouTube-dominated world of not so long ago.  Cameron Saless, chief growth officer for "must know" digital-first video company Jukin' Media (a company I previously profiled), was just recently quoted saying "we're doing almost double the views on Facebook that we're doing on YouTube today, which a lot of people don't know."  When publishers start talking openly about those kinds of metrics (as is Jukin') and publicly pitting one behemoth against another, you know there is something really going on here.

So, Sheer Scale -- Advantage YouTube.

Growth and Overall Momentum -- Advantage Facebook.

(2) Facebook's video engagement rates surpass YouTube's.

That is the chatter everywhere (note Jukin' again) -- and that's massively important to both creators and marketers of course.  As I recently pointed out in VideoInk (welcome reporter Todd Longwell to VideoInk, by the way), Facebook has two seeming inherent strategic advantages over YouTube in this regard.  First, Facebook as much deeper and more precise information about its base than YouTube which, in turn, has the potential to lead to better targeting and higher CPMs.  And second, Facebook's DNA is also fundamentally different than YouTube's.  Yes, YouTube videos are share-able (and shared) of course.  But, YouTube is still primarily about personal and passive entertainment and engagement.  Facebook, on the other hand, is (and always has been) active -- it is all about sharing.  That is its raison d'être.  That's why Facebookers seek out their feeds multiple times throughout the day.  And, that bodes extremely well for Facebook's potential to build massive scale.

But note of caution -- as Todd Longwell pointed out to me in a direct exchange, is it really fair to equate Facebook video "engagement" with that of YouTube?  After all, Facebook counts auto-inserted, "auto-play" videos equally.  And, as Longwell also pointed out, video sound is likely frequently turned off in auto-play mode.  Further, paradoxically, YouTube's more passive "personal entertainment" DNA leads to more active user searching for precise videos that appeal to them (i.e., high relevance), whereas Facebook's more "active sharing" DNA and service-generated video auto-insertion likely lead to more video "noise" (i.e., low relevance), at least initially.

Viewer Engagement -- Advantage Facebook.

Relevance & Impact -- Advantage YouTube.

(3) YouTube still has the younger millennial audience that marketers most want to reach.

YouTube is still a (if not, "the") "must use" entertainment and communication platform for millennials.  It is part of who they are and what they do.  And, those millennials are whom marketers most want to reach.  Facebook reaches an older demographic (anecdotally, neither my 15 year old daughter or 13 year old son use Facebook -- nor do any of their friends; in fact, Facebook never enters into their Instagram, Snapchat, YouTube-dominating conversations).  To a certain extent, this is a double-edged sword, however, because it is the older Facebook demographic that has more immediate buying power.

Demographics of Base -- Advantage YouTube.

Buying Power -- Facebook.

(4) Both YouTube and Facebook give creators 55% of ad revenues.

Strange.  Facebook had the chance to score a big PR win by upping that percentage even just to 60%.  But, it didn't.  Opportunity lost ... at least for now.  (And note, Facebook's 55% creator revenue share will be apportioned by time amongst all creators in a particular stream, meaning that each individual creator's share apparently will be less than 55%).

Creator Economics -- Advantage Neither.

(5) Facebook is treading carefully with its new video monetization efforts -- while YouTube carries the baggage of a certain industry narrative.

Facebook, the Challenger and newcomer, is smartly treading lightly in its initial monetization efforts -- experimenting only with a subset of its overall base.  Facebook can, accordingly, gather data (including creator and customer sentiment) and adjust from there.  It can bob and weave, fine-tuning and dialing in the "right" compromise between monetization and customer experience.  It has no baggage in that regard.  YouTube, on the other hand, carries a full load of baggage (rightly or wrongly) in the form of negative creator sentiment.  Let's face it, the Champ (in any industry) always faces the heat -- and YouTube is no exception.  Creators -- and virtually all competing services -- have gone out of their way to deride YouTube's 55/45 revenue split.  This theme of "fundamental unfairness" (some have called it greed) has become a widely-held industry narrative.  And, once that kind of narrative is developed, it is difficult to shake.

Industry Sentiment & The "Baggage" Factor -- Advantage Facebook.

BOTTOM LINE

Each mega-platform has its own inherent advantages.  And, gloves are off ... as are more and more creator videos from YouTube.  It's no longer a YouTube only multi-channel network (MCN) world (which it essentially was less than one year ago).  It is now absolutely a multi-platform network (MPN) world.

But, this is NOT a zero-sum game between the giants.  The pie expands -- and the winner here is the overall video industry and eco-system -- including content creators and consumers.  Never before have there been so many opportunities to create content -- to find distribution for content -- to find an audience for that content -- and for us, the consumers, to find content that specifically speaks to us ... as individuals.  THAT is power my friends.

And this brave new digital-first video world is still very much in its infancy ....