Facebook rolled out its live stream function, Facebook Live, last summer.

Now that individuals and commercial publishers have had a chance to get a feel for it, they and Facebook are looking for ways to monetize it.

Here come the Facebook live streaming video ads.

Makes sense. YouTube has been doing it for ever. Both digital video ad revenue and social media ad revenue are booming, including strong growth of mobile video watching and video ads. If any existing platform could compete with YouTube for video eyeballs, it’s Facebook.

Until now, Facebook has been paying high profile publishers and celebrities to live stream to help promote attention to it and encourage others to live stream as well.

People are live streaming and Facebook found something interesting – people’s live streams last longer than the typical uploaded recorded video. Live streams often last longer than an hour, which make them easy targets for short ads.

Getting the Logistics Right so People Don’t Get Annoyed

The duration of the live stream and ad is part of what Facebook hopes will keep audiences engaged during an ad. Based on how Facebook is conducting its current testing on live stream ads, no ads can be shown within the first five minutes of a live stream. This accomplishes two important goals.

First – it completely avoids the horrible pre-roll ads. Facebook CEO Mark Zuckerberg has said in the past that he’s not a fan of the pre-roll ad. Who is?

So all of the Facebook live streaming ads will occur mid-roll. This is great. Nobody really appreciates having to wait through an ad before they can see their program. Even the TV broadcasters have figured this out and go straight into the program before serving up ads.

Second – it keeps the right balance between live stream content and advertising by making sure a live stream continues for a minimum period of time before ads can start rolling. So the proportions greatly favor the publisher.

This proportion is maintained by limiting the length of any one ad. The ads themselves are allowed a maximum length of only 15 seconds. Advertisers can do a lot in 15 seconds, especially with a great message and topnotch visuals. The 15 seconds isn’t so long that it disrupts the flow of the live stream or gives the viewer the opportunity to get distracted and move on to something else.

Finding the Right Audiences

The mid-roll video ads during Facebook Live broadcasts will be an advertising game changer. This will be especially true if Facebook allows broadcasters and advertisers to work together to create appropriate content that fits the show. It won’t work well for either group if Facebook just starts shoving ads entirely unrelated to the live stream content into the middle of the flow.

You see this with YouTube ads. YouTube invented pre-roll ads and mid-roll ads, but their ad platform is not as sophisticated as Facebook’s. You mostly get ads that are completely inappropriate to your interests as a viewer. And if you’re an advertiser, it’s impossible to avoid wasting ad spend on audiences that you don’t want to reach.

I think Facebook can largely avoid this kind of ad/content disconnect. Their store of demographic info is so rich, different people watching the same live broadcast could – in theory – be able to see different ads that are specific to their interests.

But it works both ways. Advertisers will also want control over what types of Facebook live streaming content they show up in. Most live streams are the funny, happy, “don’t you wish you could be with us” sort. Some aren’t. There are instances of people live streaming some hard of sensitive topics. Facebook is providing publishers some control over what advertisers can run on their channels. Advertisers will eventually want some control over what types of channels or content their ads get dropped into.

Finding the Right Sized Audience

One of the criticisms of the Facebook live streaming as a platform for ads is that the guaranteed audience size is hugely inconsistent. Advertisers rightly want their pricing based on a minimum guaranteed audience. But that’s the thing about live streaming, it’s difficult to accurately predict audience size, especially for the ad. High profile live streams can hold onto millions of viewers for the entire broadcast. Other live streams barely scrape by.

This is why Facebook is in the test phase with live stream ads. Everyone wants it. It’s why Facebook already allows publishers to post branded content in the News Feed (with limitations). It also recently rolled out a new API that lets publishers and advertisers use their high-end video equipment for Facebook broadcasts.

All these steps improving the quality and scope of live stream and video ads opens up some very large audiences to brands that are looking to build an online following. It will be very interesting to see how Facebook unfolds this new ad channel. We are still in the early testing stages, but I predict that we’ll see a large amount of ad dollars being diverted to Facebook Live Ads in the future.