Facebook and Apple hit snags with news publishing strategies
It’s hard enough to produce the news, but making money from it is an entirely different challenge — one that many of the largest publishers were happy to let the likes of Facebook and Apple help out with.
For Apple, it seems that publishers have yet to see anyincreased benefits traffic to their own sites, or any additional money generated via ads running alongside articles hosted through Apple’s News app. Ads are something of a necessary evil when it comes online publishing. While Facebook’s new publishing platform, Instant Articles, has had some success with reaching and engaging users, the ad restrictions placed on its 20 initial publishers have proven problematic.
Facebook is supposedly thinking hard about the ad regulations on the Instant Articles platform, according to a Wall Street Journal report last week. Currently, Instant Articles only allows a single large banner ad per 500 words–a far cry from the high-dollar ads that appear on publisher websites. Unsurprisingly, in a world where ad-blockers kill websites, publishers are pushing back.
Early number indicate that engagement is high and that user experience is better on mobile using Instant Articles than it is on your average mobile-friendly publisher website. Instant Articles (IA) lets publishers tap Facebook’s massive audiences faster and with better engagement and retention, but the problem is that the ad revenue on Instant Articles pales in comparison to what publishers can achieve on their own website. Without the interference of ad-blockers, anyway.
The tensions here are obvious: Facebook wants IA to do well — it wants the user experience to be stellar and for people to come to the app often and it knows that most people hate ads. Publishers want eyes on their content, but they also need ad money to sustain operations. Advertisers want to keep ad budgets low. Clearly something’s gotta give, right?
“Instant Articles is fairly new,” says Forrester analyst Erna Alfred Liousas. “Given the benefits Facebook sees from rich media, it appeared odd they wouldn’t allow rich media ads in Instant Articles. I believe they are revisiting that point. Providing publishers with an environment that mirrors the formats generating success on their websites is a much needed change.”
Facebook’s Instant Articles product manager Michael Reckhow told WSJ that Facebook will be working with publishers to balance their advertising needs with user experience. He didn’t give much in the way of details, but Michael Jude, Frost & Sullivan’s Stratecast Consumer Communication Services Research Manager, postulates that Facebook is likely already overhauling their ad strategy.
“The balancing act it is trying to walk is one that allows enough copy to be effective, without creating, in essence, an infomercial size piece,” says Jude. “In addition, it wants to encourage volume of transmissions, since the revenue model is built on a price per push.”
Liousas echoes the need for balance: “To keep these publishers interested for the near future, Facebook has to find a balance between its needs of driving a profit and the publishers’ needs of driving near equal placement value to what is generated on their websites.”
The key will be keeping publishers interested and bringing more outlets onto the platform when IA struggles to provide the kind of revenue that mobile websites bring. Traffic is important, but it’s still ad dollars that make the online publishing world go ’round.
“Although there was a fairly robust response to IA, with 20 or so interested publishers,” says Jude, “that number has been dwindling as the experience with IA has failed to live up to more common types of advertising. Any channel form advertising content that runs through Facebook is good for Facebook, since it enables Facebook to capture part of the advertising spend. The more advertising the better: Google built its business on this notion and Facebook is trying to find ways to emulate Google.”
Even with the ad shakeups, though, it seems unlikely that publishers will turn their backs the valuable Facebook audience that comes with Instant Articles.
“I don’t see any reason why this ad-format tinkering should cause any publishers to withdraw from the Instant Articles program,” says Forrester publishing analyst Susan Bidel. “Both Facebook and publishers at large are keenly aware that they must offer users a premium experience. Now advertisers need to step up and pay for the sort of showcase environment that premium publishers both in the Instant Article program and outside it offer them.”
While changing advertiser behavior may prove difficult, it would certainly relieve some of the tension in the online publishing industry outside of Instant Articles. Though we’re likely to see Instant Articles changing in an attempt to strike some kind of middle-ground between user experience and the ads that publishers need to survive, the evolution of IA may involve much more than bigger banners and rich media.
“This could evolve into an interactive advertising medium that combines social media, with targeted advertising and crowd evaluation, says Jude. “They are looking for the magic combination and it will be interesting to watch it evolve.