Publishers used to get 100 percent of their ad revenue. But now, they have to share it with Facebook, Google and Apple. The opportunity cost is ad revenue, but the gain is user experience.
Today, every major tech company has its own version of Instant Articles. This content format is initiated by Facebook and finds itself in Google Accelerated Mobile Pages (AMP) and Apple News. The trend reflects an ongoing shift in publishing, where publishers have to share their ad revenue in exchange for better user experience.
Homepages are no longer the primary entry for readers to access content. When publishers sell ads, they want them to be someplace readers will see, according to Scott Singer, managing director of digital media consulting company DDG.
"Publishers may be doing a deal with a devil, but they have no choice because they have to be where the eyeballs are," Singer says.
What are Facebook, Apple and Google offering, respectively?
Facebook, Apple and Google are all approaching the challenge of speed. In May, Facebook unveiled Instant Articles, which is only open to big publications like The New York Times and BuzzFeed. The goal is to speed up the delivery of news on the social platform's mobile apps. With Instant Articles, publishers will still be able to reap the rewards of directly sold ads, and take a 70 percent cut if Facebook sells the ads through its Audience Network product. Publishers are not allowed to work with third-party companies to sell their ad space.
With the launch of its latest mobile software update, Apple released Apple News, its own version of Instant Articles and a substitute for Newsstand. Similar to Facebook's advertising model, participating publishers can keep 100 percent of the ad revenue they generate on Apple News, as long as they book the ads (Read more...). They take a 70 percent cut if Apple sells the ad space.
"Google has a big ad-selling business. The problem that consumers are having today is that with all ad-tech companies trying to load ads into articles and videos, everything takes forever to load, so people use ad blockers to speed the experience. Therefore, Google is trying to eliminate the loading problem through a new coding mechanism," explains Singer.
The advertising model in the publishing industry has changed.
Previously, publishers got 100 percent of their ad revenue. But now, they have to share their ad revenue with Facebook, Google and Apple. Although those tech players give publishers the option of keeping all of their ad revenue, media companies may have a hard time selling the entire inventory by themselves because page views to publications' home sites are diminishing.
"This is a challenge because publishers want to control their ad sales and they want to get 100 percent of the revenue. But at the same time, they have to be where their readers are located. If they don't want to participate, they will not be in the channel where everyone is reading," says Singer.
For publishers, the obvious concern is that the tech companies are going to take a big share of revenue from the traffic that is, most of the time, not coming directly from their own sites. As content has become commoditized in many ways, it's essential for publishers to understand the role they play and the value they bring to the ecosystem that tech companies have created around users, according to GianCarlo Pitocco, chief strategy officer of Attention, KBS's social media agency.
"This shift in [audience] behavior cannot be ignored, and it requires publishers to take on a more proactive approach to the role they play in this environment," says Pitocco.
He explains that the medium carrying content is dictated by audience behavior and attention. The medium used to be printed newspapers delivered to subscribers or sold via brick and mortar stores. Then it was websites.
In both cases, publishers had great control over the medium carrying the content. But when Google started offering a better way to discover content on the Internet, the company took a cut for discoverability.
"Now, Facebook offers the best way to discover content independent of its sources online, which means publishers again must adapt to the behavior of their audience," he notes.
It's all about user experience.
Pitocco believes that the offering of Instant Articles shows that user experience trumps everything else. Indeed, many publishers are looking to work with various distribution services - Facebook Instant Articles, Google AMP and Apple News - because they want to extend the reach of their content and offer a good user experience.
Cory Haik, executive director for emerging news products at The Washington Post, addressed this point when Google introduced AMP. And the main reason The New York Times is participating in these kinds of distribution arrangements is to "expand the reach of Times journalism and engage with new audiences."
"We are, of course, entitled to the revenues generated on our own content pages, but the advertising piece of it is somewhat of a secondary consideration," says the company's spokesperson.
Ad revenue models may change over time as Facebook, Apple and Google have more impact on audience attention. Regardless of different pricing models, publishers have to actively collaborate with platforms to find their audience. The opportunity cost is ad revenue, but the gain is user experience.
Like DDG's Singer said, publishers may be doing a deal with a devil, but without the devil, they cannot reach their readers. It's a fair game.
Images via Flickr
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