Facebook Is Changing The News Game -- Are Publishers Ready?

When Facebook introduced Instant Articles earlier this year, the company guaranteed a better experience for users and cooperation with media companies (full disclosure: I own Facebook stock). Both are certainly true, but the motivation behind this product has always been to keep users within the Facebook ecosystem. Facebook has business interests in keeping their audience engaged on their platform: Increasing the time people spend on a platform translates into billions of dollars of value over time.

Facebook knows they need high quality content to be shared, but they also want those links to refer to Instant Articles on the platform rather than to the publishers’ sites. That way, users have fewer opportunities to view multiple articles and stay on the publisher site instead of returning to Facebook. Facebook needs to control more attention to fuel its growing valuation, and pushing content that is native to the platform is the best opportunity to keep an audience engaged without driving them to external media sites.

According to Pew Research, Americans are turning to social media platforms more frequently to access news. In 2015, 63% of Americans reported getting news on Facebook and Twitter versus approximately 50% in 2013. The average American is spending almost 1.5 hours each day on social media and close to 1,200 minutes per month on Facebook. Just capturing seconds of people’s attention each day equates to multi-billion dollar businesses, like Buzzfeed (36 seconds), Vice (16 seconds), and Vox (17 seconds). Facebook is determined to continue to grow the time we spend with their products, and is using Instant Articles to trap more attention in the platform.

As publishers become ever more dependent on Facebook and Google as traffic sources, they’ve given up control of their audiences. Publishers need to consider the risks of relying on one or two traffic sources so heavily. Supplier concentration is seen as a very risky proposition for any business, and in this case, publishers have become too dependent on Facebook and Google, allowing them to dictate the terms.

Pushing Instant Articles is in the best interest of Facebook’s business as it tries to increase its reach and maintain higher engagement. As people spend more time on the platform, it gives Facebook the opportunity to sell more advertisements. Media companies will continue to have the ability to sell ads on Instant Articles, but Facebook will now deliver targeted ads against the unsold inventory on those articles and drive users to read more Instant Articles, share them on Facebook, or return to the Newsfeed.

As Parsely’s first-party data across 400 publisher sites demonstrates, Facebook displaced Google as the number one source of traffic to publisher sites in July 2015 and continues to grow as a percentage of traffic overall while Google remains stable. This suggests that Facebook is displacing other traffic sources, like directly visiting a url from the browser and long-tail sources. This is leading to a world where publishers are dependent on just two traffic sources for their supply of audiences online.

If publishers were unaware of the dangers of relying on Facebook, they’re starting to see the impact today. Digiday referenced data from SimilarWeb and SimpleReach to demonstrate the impact of Instant Articles on top publishers. In their report, As of October, referral traffic to publisher sites from Facebook on desktop and mobile is down 32 percent from January 2015 on the top 30 Facebook publishers.  Parsely, however, points out that SimilarWeb and SimpleReach used sampling and that SimilarWeb relied on desktop traffic only to draw their conclusions.  Parsely cannot breakout the Instant Article traffic from standard referrals, but they believe that the impact across their network is much less than what SimilarWeb and SimpleReach reported.

As the move toward mobile, social, and messaging continues, it’s important that Facebook and similar companies optimize for the customer’s experience online with innovations like Instant Articles. That being said, publishers should beware of the siren song of free traffic and supplier concentration. Diversification and converting readers to loyalty are the only sustainable way to maintain an existence outside of the largest social networks. Although it is a bit dated, as Pew Research found, audiences that return directly to a site are much more loyal and have much higher engagement with content on the publisher sites than those that arrive via Facebook. At the time of the report, only Buzzfeed had demonstrated an ability to convert Facebook audiences into loyal direct readers with 11.3% of their readers arriving through Facebook and Buzzfeed.com. This was published prior to Instant Articles, which Buzzfeed has embraced.

As brands learned a couple years ago, you have to pay for traffic referrals from Facebook and expect the digital media empire to capitalize on its growing influence with consumers. This is all great news for Facebook shareholders, but warning signs are starting to become a reality for the most Facebook-dependent publishers. Their business models depend on converting Facebook traffic into loyal readers. If they cannot do that, they will remain dependent on Facebook’s algorithms just like they were to Google’s during the SEO battles of last decade. Those algorithm changes on Google ruined some companies while giving others the edge over time. The same will be true with Facebook, but instead of a promoting an open-web, like Google did, Facebook is determined to trap as much traffic in its walled garden as possible. As a shareholder of Facebook, I hope they’re successful.

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