Thursday, May 14, 2015

Why publishers had to partner with Facebook

The natural order of the universe was disrupted yesterday when BuzzFeed, NBC News, the New York Times and a number of other prominent media companies shockingly ceded to Facebook the marketing and monetization of portions of their valuable content. 

The move, which represents a further step in the transfer of power from the media tribe to the technology tribe, means that some of the biggest names in media have conceded that they are neither large enough nor strong enough to thrive as independent digital publishers without the help of at least one of their fearsome frenemies in Silicon Valley. 

In addition to Facebook, the other frenemy, of course, is Google. Although the media companies like to think that the quality of their work speaks for itself, Facebook and Google referrals steer the preponderance of the traffic to almost every news site. 

The Facebook deal institutionalizes as never before this long-running dependency. In addition to the trio mentioned above, the other media companies who will be funneling content to Facebook are The Atlantic, BBC News, Bild, The Guardian, National Geographic and Spiegel Online. Fearful of being left behind, it is fair to assume additional media names in the not-too-distant future will feel obliged to join, too.  

Here’s how the deal works: 

The media companies will give full articles and videos to Facebook, so the social network can distribute them among its more than 1.4 billion usersPublishers can keep all the revenue from any ads they sell to accompany the content they allow Facebook to post. When Facebook sells ads against the content contributed by the media companies, both sides will split the proceeds equally. 

The choice to throw in with Facebook could not have been easy for the proud media companies. Historically, the last thing they wanted was to give their expensively produced content to another brand competing for the same eyeballs and ad dollars. But that was then and this is now. The media swallowed their pride because they know they lack the sort of massive global reach that only Facebook can provide.  

Difficult as the decision may have been, it was inevitable, given the several critical capabilities that Facebook has developed. These are its not-so-secret superpowers:

Superior mobile prowess. In addition to the sheer size of its audience, Facebook has mastered the art and science of mobile publishing better than almost anyone. In the first quarter of this year, the company reported, 65% of its traffic and 73% of its ad revenues came from such highly optimized mobile sites as its Paper app. 

Superior audience engagement. Based on the amount of time people spend on Facebook, it is fair to say its users are considerably more passionate about the service than the visitors to a typical news site. According to Alexa.Com, the average user spends 18.4 minutes per day on Facebook, as compared with 9.5 minutes at the New York Times, 6.4 minutes at NBC News and 5.4 minutes at BuzzFeed.  

Superior customer data. Because enthusiastic users frequently and liberally update the site with a plethora of personal data, Facebook knows more intimate and accurate details about more people than any company in the world. The information is updated dynamically in real time, as people report everything from their favorite new song to the jeans they want to buy to the fact they will have a baby in six months.  

Superior ad intelligence. Facebook enables advertisers to target messages with heretofore unprecedented precision, thanks not only to the rich information supplied by users but also by analyzing information captured from the friends in their networks.  The ad-intel is supplemented with location data acquired from Facebook’s popular mobile services. 

Superior content targeting. In the same way data is used to target commercial messages, Facebook has the capability to match the right content with the right user by monitoring her searches and media consumption. If Facebook sees that someone likes cooking Italian food, it can slip relevant recipes from the NYT food page into her news feed, paired conveniently with an ad for a pasta maker. When Facebook recognizes that a bride is planning a honeymoon in Florida, it can send her travel videos embedded with customized hotel offers. 

With everything Facebook brings to the party, the partnership ought to be a plus for the participating media brands. But some media partners are experiencing pangs of buyer’s remorse, because they fear Facebook may trim their split after they get hooked on this welcome new stream of  incremental revenue.  

It seems fair to conclude that the media companies who took the leap felt they were damned if they did and damned if they didn’t. In the end, however, this was an offer they couldn’t refuse.  

2 Comments:

Blogger Unknown said...

The Times tried and failed to reach mobile readers on their own with NY Times Now. Okay, now what? They could sit back and hope their aging print and online subscribers live to a ripe old age while their ad revenues continue to shrink OR they could grab a lifeline from Facebook.

I expect Facebook will claim most of the ad sales on NY Times content, given FB's extraordinary targeting prowess. To those who worry that the Times is giving up revenue, the reality is, this deal will allow the Times to monetize readers it could not reach on its own.

8:32 PM  
Blogger Mike Fuller said...

Old media = Stephanopoulos
New media = Google

Nuf said.

12:42 PM  

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