The social network wants to show ads to people watching videos on the platform and will share the revenues it raises with publishers, according to Recode.
Sources claim Facebook will test a ‘mid-roll’ ad format that will allow publishers to host ads in their clips after people have watched for more than 20 seconds.
It is understood Facebook will provide publishers with 55% of sales, which is the same revenue split offered by Google-owned YouTube.
Last year Facebook revealed its users are watching 100 million hours of video per day on the site.
Facebook chief executive Mark Zuckerberg has been against introducing pre-roll video ads that play before the clip starts, which has prevented video publishers making revenue from video content they host on Facebook.
The social media giant introduced functionality to videos last year that allow them to be sponsored by advertisers as it sought to help publishers monetise their content.