Stay Free (And Flexible) — The Power of Independence in Ad Technology

By Frank Sinton

After spending more than $400 million to buy sell-side ad-tech platform LiveRail, Facebook has been steadily closing key components, including yet another just-announced round of layoffs and closure of its LiveRail Central open exchange. The company said it will focus on its private marketplaces, which leaves all but the largest video producers scrambling to replace revenue they used to realize through the exchange.

Due to video production’s high costs and the challenges of scaling this highly lucrative inventory, most publishers still monetize their video content through open exchange buying. Closing LiveRail’s platform will create new revenue challenges for most smaller publishers, i.e., those without their own team selling into trading desks and DSPs.

All open exchanges connect supply and demand, with aggregators playing a key role in creating liquidity; many of these aggregators have direct publisher relationships and can provide additional demand scale where publishers lack revenue. And in an exchange where transparency exists at the domain level and white-hat exchange partners provide that liquidity, publishers will be especially hard hit by its closure.

This decision, coupled with Facebook’s intense focus on Instant Articles, has basically told companies to get on its platform or else. Companies wanting an open marketplace will have to go through Facebook’s front door — Facebook inventory or Facebook Audience Network — under the premise that the social-media giant is a better arbiter of quality than are the publishers. Not incidentally, Facebook ensures some margin uplift for itself, as buyers who relied on LiveRail Central are pushed to Facebook’s buying platform instead.

And so it begins.

Going “all in on Facebook” for publishers can be an attractive strategy: the company offers scale, data and access to buyers that are traditionally beyond many publishers’ grasp. And leveraging Facebook’s power can and should be part of a broader monetization strategy. It’s just that we should modify that “all in” part. Facebook will be absolutely essential to publisher strategies for the foreseeable future. But publishers seeking to optimize their revenue opportunities must consider strategies beyond Facebook’s very large, but walled garden.

There’s an old fable about not putting all your eggs in one basket. That holds here as well. Facebook brings a huge audience, no doubt. And on Facebook, you indeed get finely tuned access to precise slices of its massive audience.

But there are other considerations. Publishers should consider a multi-pronged approach that can address the equally huge audience beyond Facebook. Some may ask why they should bother with that other side, especially with all the comparative complications of trying to reach it?

One good reason: maintaining some control over your company’s audience and even its destiny. For an example of why, let’s take a look at Facebook’s other recent announcements.

CEO Mark Zuckerberg just called live streaming the company’s top priority, and assigned 150 engineers to the technology. Facebook opened the tech to anyone who wanted to start their own live show and even paid some big publishers to create programming.

Most importantly, Facebook changed its algorithm so live streams would be seen a lot more frequently in your News Feed. Why does that matter to a small publisher? Maybe you’re not set up to run your own live-video shows. Or you have no idea how live video could help connect you with your audience. Outside content was already fighting for precious attention in the News Feed. Now that content will drop in the algorithm in favor live video.

That means the line to your audience just got longer, because live streaming just cut to the front. You don’t have any choice in the matter, nor will you have any choice when Facebook makes its next algorithmic change.

And while Facebook also just added a branded content tag and ad unit, making money directly from Facebook remains deeply problematic for most companies. Again, only a few big publishers are getting cash from Facebook right now. This even as the social-media giant has seemingly overnight become one of the world’s biggest video publishers, while creating no content of its own.

As I mentioned in this recent Ad Exchanger piece, it will be interesting to see what, if any, commitment Facebook will make to help publishers monetize their video with an independent SSP stack.

What shouldn’t be lost in that discussion is the importance of independent ad-tech vendors, vendors whose interests align with publishers that value their own independence and want to control their own future.

First of all, while Facebook execs oppose “interruptive” preroll and midroll ads, these are still most common monetization options for most publishers. Additionally, smaller publishers may not have access to more sophisticated alternatives, and undoubtedly will suffer more than larger publishers from any Facebook fiat in this regard.

Second, independent tech vendors such as Beachfront were built to innovate specifically for the benefit of our clients. We build products to serve our clients’ needs, instead of shutting down platforms so we can better reward our core business.

For instance, we now support social publishing (and subsequent monetization), so publishers can effectively manage on-site and off-site video through one unified view. Beachfront also has enhanced our private marketplace capabilities, part of a broader commitment to provide a complete suite of video-first, mobile-first offerings on both the sell side and the demand side.

Publishers need access to an independent sell-side option. Publishers trying to build a sustainable monetization strategy need the flexibility, control and access to options that reach far beyond Facebook. Beachfront has grown because we create video solutions that enable publishers navigating this complex media landscape, wherever their inventory may be — onsite, offsite or on social media.

It’s a holistic approach designed to build a publisher’s video business. As Facebook put it, we actually are “committed to delivering great experiences for people, outcomes for advertisers, and sustainable monetization for publishers.” Independent publishers deserve nothing less.