Facebook Instant Articles: A Trojan Horse For Audience Network

Facebook-FIA-FANThe claim that Facebook Instant Articles is about a faster user experience is a red herring.

While that may be one goal, the program has a strong business rationale: It extends Facebook’s walled garden and creates a new foothold for its $1 billion Facebook Audience Network ad platform.

Instant Articles does not allow third-party monetization. Participating publishers must either monetize their inventory through Audience Network or supply their own direct-sold ads. For many that choose the first option, this is the first time they will ever try out Audience Network.

Facebook Instant Articles is officially just a few weeks old, and Audience Network is just two years old. Together, their potential to disrupt the programmatic ecosystem is too large to ignore.

“Facebook Instant Articles is an assault on the entire ad tech ecosystem,” said Ari Paparo, a veteran of the space and CEO of startup Beeswax.

When publishers monetize using Audience Network for their Instant Articles posts, the yield nearly rivals what they can get through their independent mobile monetization partners.

Consider LittleThings, a programmatic-focused social publisher that joined Instant Articles a few months ago.

When LittleThings uses Audience Network to supply ads for its Instant Articles, Facebook falls short of what it can bring in with outside programmatic partners, but not by much. Audience Network delivers 70% to 90% of the revenue per page as the site’s mobile web experience – a strong position because the site’s mobile monetization is above average, according to revenue VP Justin Festa.

Due to the strong revenue contribution, LittleThings added a Facebook native ad unit to its regular mobile web experience.

“Instant Articles is opening publishers’ eyes to how well Facebook can target through Audience Network,” Festa said. “You can open yourself up to unique demand that you can’t get anywhere else, and they can do it better than anyone else I’m seeing so far.”

LittleThings is not alone. The Washington Post, which also uses Audience Network, reported “strong” results, according to CRO Jed Hartman. A millennial-focused publisher polled by AdExchanger reported Audience Network matches its typical mobile web ad revenue per page.

Why is Audience Network performing so well for these publishers? It comes down to data and speed.

Many ad tech players must use probabilistic identification methods and code that bog down page load times while targeting consumers programmatically. By comparison, Facebook uses its massive deterministic data set in a fast-loading environment.

Because of this advantage, the Instant Articles project has the potential to expand the reach of Audience Network, encouraging more publishers – especially those struggling to monetize mobile – to partner with Facebook to monetize their inventory for the first time.

The Competitor

If Google was the default monetization partner for desktop, maybe Facebook Audience Network ends up being the AdSense for mobile.

But it won’t do so without competition from Google, whose Instant Articles competitor Accelerated Mobile Pages (AMP) sought to differentiate with policies as open as Facebook's are closed.

At this point, Google AMP isn’t yet competing directly with Instant Articles, since it’s search-focused and Instant Articles is social-focused.

“From a revenue perspective it’s in its infant days. It’s also a phenomenal product,” Hartman said of AMP. The Washington Post has been an early partner to both products.

Eventually, though, AMP and Instant Articles will face off.

“The AMP format provides the best flexibility, and allows you to continue to experiment with multiple monetization strategies and multiple ad networks,” said Jack Downey, director of market development for Sovrn, which is one of the third-party publishing (not monetization) partners on Instant Articles.

In contrast, Facebook publishers “are relinquishing control in exchange for reach,” Downey said. Facebook declined to comment for this story.

Once AMP progresses, publishers may put AMP head to head with Instant Articles. For example, they could test linking to an AMP article from Facebook and compare revenue.

But publishers, skittish from Facebook’s constant algorithm adjustments, worry that not using Instant Articles will penalize them. Maybe Audience Network doesn’t monetize each page as well, but using Instant Articles leads to 10% more page views, making up revenue that way.

“The true test will be whether Facebook would give an equal weight to an AMP-shared post on Facebook, given they are both fast to the user – the original goal behind Facebook Instant Articles,” said Adam Singolda, CEO of Taboola, whose tech works in AMP, not in Instant Articles.

But right now, Facebook’s closed positioning with Instant Articles is leaving publishers no other choice than to try out Audience Network. Which, it turns out, they quite like.

Walled-Garden Extension

With Instant Articles, it’s possible – although not exactly probable – that Facebook won’t go the walled-garden route in the long run.

“It’s premature to suggest that the model Facebook is employing is set in stone,” said Andrew Casale, CEO of Index Exchange. “As we’ve just seen with Google and dynamic allocation, even large-scale platforms listen to marketplace demands and evolve to meet them.”

But Facebook Instant Articles is taking a page from the Google DFP playbook. Google did not allow fair competition within its ad server, preferring to give itself prioritized access. Eventually, publishers fought back by implementing header bidding, which led Google to cave and allow outside exchanges to compete.

On Instant Articles, Audience Network-supplied ads never have to compete on price with an outside ad. That means that even if Facebook’s network seems to be performing strongly for pubs, they risk being paid less for their inventory.

“There is no way Facebook would beat all the demand,” Paparo added. “On average they might, but the average doesn’t matter.”

The best way for Facebook to maintain its walled garden would be to beat the competition without allowing competition. That means strong monetization while bending where it can to publisher demands.

Facebook has changed the Instant Articles program multiple times in order to respond to publisher needs. For example, Facebook changed its rules to allow additional ad units when publishers asked for more. It also allows native advertising to be displayed in Instant Articles format, and loosened branded content posting restrictions.

“They have been working quickly and been relatively receptive to publishers’ needs,” Downey said.

Publishers In The Middle

Publishers do want competition. LittleThings wouldn’t mind seeing less interruptive native advertising players, such as Kargo or TripleLift, added to the monetization mix on Instant Articles, instead of having it closed to all outside ad tech.

In the absence of competition within Instant Articles, publishers are hedging their bets by posting in both formats to make sure Instant Articles doesn’t start underperforming.

Even though LittleThings is a booster for Audience Network, it still only publishes 30% of its articles via Instant. “I don’t know that [Facebook] needs to be the sole way I monetize,” Festa said. “I want to add competition to the mix.”

Thought Catalog, which is also using Audience Network ads in its Facebook posts, has similarly chosen not to go all-in on Instant Articles.

"We will stay nimble about how much content we make Instant, because the value of Instant vs. web could fluctuate,” said Alex Magnin, CRO of Thought Catalog. “For instance, it's possible that as more and more articles go Instant, that influx of ad supply could cause prices to go down. It's good to keep a foot in both camps."

If Instant Articles accelerates Audience Network’s rise, publishers may end up with more competition overall. Combine Audience Network with Google Ad Exchange, and publishers will have two partners with millions of advertisers combined bidding on their sites.

“We are watching a remarkable battle,” Hartman said. “For us, the goal is to be as successful as possible by leaning into partnerships with these platforms, rather than complaining about their power.”

During such a battle, publishers may end up with more power than ever, with two suitors for their inventory. As for Instant Articles being an “assault on the entire ad tech ecosystem”? Downey thinks that may not apply.

“I think that’s giving too little credence to the power publishers have but don’t think they do,” Downey said.


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