Holiday Ad Face-Off: Facebook wants to eat Broadcasters Lunch

The Facebook "Like" sign outside headquarters in Menlo Park, California.
Stephen Lam | Getty Images

This holiday shopping season the ads with the most impact may not be sandwiched between sitcoms and reality shows on TV, but rather between photos of friends' kids and dogs on Facebook.

The social network is making a big push to sell video ads this holiday season, offering marketers the ability to deliver video ads to mass audiences with better targeting and measurement than TV.

"2015 will be the year of mobile video advertising and it will be a big shock for the traditional TV industry," BTIG's Rich Greenfield warns.

Why now? Video on Facebook is taking off – with an average of one billion video views daily, two thirds of them on mobile devices. While 100 million new videos are uploaded to Facebook every month, broadcasters are lamenting weak ad sales: TV's share of total ad spending is slowly shrinking, while mobile ad spending – a particular area of strength for Facebook – is expected to nearly double this year, and grow by 40 percent next year. There's no question that digital video is stealing eyeballs; now it's making a bigger play for ad dollars, and Facebook is looking for a bigger piece of the fast-growing pie.

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The social network is working directly with brands from Kate Spade to the US Postal Service to craft custom video campaigns. Take the marketing campaign of one big TV advertiser – Gap. Leveraging Facebook's ability to target different videos to different audiences, and then to follow up with an offer later, the retailer is inviting people who saw a video, to later click to shop. Vistaprint's video ads – about the challenge of getting the right holiday card photo – invite customers to create their own cards with their Facebook photos, at a discount. But it's not just advertising to everyone – it's specifically looking to reach *new* customers by using Facebook's 'lookalike' targeting – to connect with people with a similar profile to those who purchased holiday cards last year.

With Honey Maid, Facebook is targeting short-form recipe content to "millions of baking enthusiasts" to show them how to use Graham crackers into different holiday deserts. Facebook reports that the first video in the campaign, for PB cups reached nearly 2 million people with 80 percent of the views on mobile devices. Tecate is using Facebook's platform to specifically target bicultural Hispanic men age 21-34 with its video ad campaign.

"There's no doubt, that TV advertising is under pressure," says BTIG's Greenfield. "We've got a good economy, overall ad market is strong, and TV is uniquely weak. And you're seeing live ratings for television, really down sharply, and I think it's causing every advertiser, every brand, is rethinking, what is their strategy to connect?"

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"The age of the TV viewer is getting older-- in primetime it's now 55," says Horizon Media's Brad Adgate. "Advertisers are always interested in reaching younger age groups: look at who's watching online content, 40% are under the age of 35. So you're starting to see more and more marketers reallocate their dollars from TV to online video for that reason." And the potential is massive-- Adgate says that while roughly $70 billion is spent on TV ads, only $6 billion is spent on online video.

Facebook certainly isn't the only one looking to tap into the explosion of demand for online video-- Snapchat recently started to roll out ads, joining Instagram. Facebook is the giant, with more reach than anyone else, but with Snapchat topping 100 million users, Instagram's more than 200 million, those platforms offer the kind of scale and targeting that can start to rival TV.