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The Primary Winner Of Facebook's Expansion In Video Will Be Third-Party Measurement Firms

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The Primary Winner Of Facebook's Expansion In Video Will Be Third-Party Measurement Firms

Facebook Inc (NASDAQ: FB) might boast content agreements with Discovery Communications Inc. (NASDAQ: DISCA), A&E, Univision and the widely-followed Indian Premier League.

But that may not be enough to re-earn the esteem of advertisers, on whom its Watch project relies.

Measurement issues at Facebook have been top-of-mind for many of those same marketers over the past year given revelations around overstated average video viewing time, video viewing completions, miscalculations of organic page reach and other data which impacts how budgets are planned,” Pivotal Research analyst Brian Wieser wrote in a Thursday note.

On Tuesday, Wieser revealed exaggerated audience estimates, with Facebook Ads Manager claiming a reach of 41 million 18-to-24-year-olds and 60 million 25-to-34-year-olds. The 2016 U.S. Census only calculated 31 million and 45 million Americans in those respective brackets.

The exposed embellishment may justify continued strength in TV’s share of advertising, as well as increased referral to the likes of Nielsen N.V. Ordinary Shares (NYSE: NLSN) and COMSCORE, Inc. (OTC: SCOR) to corroborate viewership records and appraise Facebook ad opportunities.

“While we think the company is positioning itself to compete for TV budgets with TV-like content, we think that the large marketers who dominate TV advertising will only do so after applying significant scrutiny to the metrics associated with Facebook campaigns,” Wieser wrote. “As these products generate revenue on a campaign basis, growth in Facebook, YouTube and other digital media will continue to provide growth support for third party measurement companies.”

Pivotal maintains a Hold rating on Nielsen with a $38 price target and a Sell rating on Facebook with a $140 target. At the time of publication, Nielsen was trading at $38.77 and Facebook at $172.43.

Related Link: So What's The Difference Between YouTube And Facebook's New 'Watch?'

Latest Ratings for FB

DateFirmActionFromTo
Sep 2020OppenheimerMaintainsOutperform
Sep 2020Morgan StanleyMaintainsOverweight
Sep 2020KeyBancInitiates Coverage OnOverweight

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