“The Sell Sider” is a column written by the sell side of the digital media community.
Today's column is written by Mike Peralta, CEO at AudienceScience.
Online publishers rely on Facebook and other social sharing channels to extend the distribution of their content. Social is essential for driving traffic, building exposure and incremental revenue. But with the launch of Facebook’s Instant Articles product, publishers like The New York Times, National Geographic and BuzzFeed are now hosting their content on social networks.
Publishers clearly feel there is a benefit, with the Times and NBC reportedly planning to push 30 or more stories a day on Facebook. Still, it’s alarming that they may not be considering the long-term implications of such a deal. Right now, it seems that publishers are abandoning market momentum and turning back the clock to an outdated idea of traffic-based advertising sales, simply for a small short-term gain from Facebook.
To its credit, Facebook has made several concessions to publishers in exchange for hosting their articles and traffic on the Facebook.com domain. Publishers get to keep 100% of the revenue from ads they sell. Clicks on articles count toward comScore site traffic, and any “shares” of the article produce a link that drives other users to the publisher’s domain.
That would be fine if online media was still sold based on visits and raw traffic numbers. With the rise of programmatic buying and big data, advertisers are now looking to buy on an impression level. They want to use data to reach the best audiences rather than simply buy run-of-site inventory that may miss the mark. Even Facebook understands this, working with several API partners that can access the network’s data to deliver highly targeted ads on the home page and within a consumer’s feed.
So publishers are keeping ad revenue but sacrificing incremental traffic. They are also getting into murkier waters when it comes to data. The New York Times revealed that publishers are allowed to record user data using "the same tools they use to track visitors to their own sites." But that doesn’t answer the question of data ownership, which is what truly matters here.
In a direct publisher-to-advertiser relationship, the two parties can share the data they own to match consumers on a site. But by hosting content, Facebook becomes the de facto first-party data owner. Publishers lose that direct connection that gives them so much value. If the data they receive from Facebook is anonymous, that’s a huge blow.
Publishers with logins, such as NYTimes.com, could theoretically work with Facebook to match up their data to learn who accesses content via Facebook and augment their own first-party data, but it would only create an extra hassle. It’s counterintuitive to all of the trends within the digital media marketplace, with Facebook forcing publishers to hold on to the old standards of web publishing.
There’s a huge benefit for Facebook. By hosting content, it keeps users on the Facebook.com domain longer. It also gains an even greater ability to target users based on their consumption habits and publications of choice. That’s positive for Facebook, which already keeps its own data within a walled garden and profits heavily from leveraging that data for advertising. Essentially, Facebook is trading ad revenue for even more profitable data, and publishers appear more than happy to chase the revenue carrot.
The worst-case scenario is that publishers start building their content strategies around Facebook’s rules, pumping out shareable content that gets pushed across social channels at a higher rate. We’ve seen outlets like BuzzFeed and Upworthy do this in the past, but they have also risen and fallen based on changes to Facebook’s news feed algorithm. Since some of the publishers participating in Instant Articles are more than a century old, tying their editorial output to the Facebook algorithm would go against tradition and be inconsistent with historical journalistic practices.
All in all, publishers need to heavily consider the level of control they continue to fight for, and whether they want to give that over to another intermediary. The industry is shifting in publishers’ favor, closing the gap between advertisers and publishers. Owning revenue strategies and cultivating audience data to create better consumer experiences and ad products are the essential factors for a publisher’s future success. Giving that up for quick revenue is a short-term fix with detrimental long-term implications.