Facebook said the new ads will not eat into mobile data plans because videos will only download when devices are connected to WiFi.
The feature offers companies a new way to promote movies and products on smartphones and computers, and is being tested with a small group of Facebook users.
"Rather than having to click or tap to play, videos will begin to play as they appear onscreen -- without sound," Facebook (Fortune 500) said in a statement. When users tap the videos, the sound will turn on and the video will play in full-screen mode. ,
Investors cheered the news. Shares of Facebook (Fortune 500) gained nearly 2% in early trading and hit a new all-time high on hopes that the new video ads will boost the company's revenues. ,
Analysts at Oppenheimer estimate Facebook could gain as much as $8.4 billion per year in revenue once the program is fully rolled out.
But don't expect a flood of video to start clogging up your online experience just yet.
The company says only a few Facebook users will see video ads this week. It's testing the feature with one company, Summit Entertainment, which is promoting its new movie Divergent, starring Kate Winslet.
Facebook has been working to improve the video experience for users since September. It says users view, like, share and comment on content more often if videos begin playing automatically.
For users who don't want to see the videos, Facebook suggests quickly scrolling past them.
Facebook also says the new ads will not eat into mobile data plans, explaining that videos will only download when devices are connected to WiFi.
Last week, Standard & Poor's said the social networking giant will be added to the benchmark S&P 500 index after the market closes on December 20.
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