THE FUTURE OF TRAFFIC FOR MEDIA PUBLISHERS

Lessons from Retail — Part 2 — The New Reality of Media Distribution
Your branded content > Their omni-channel revenue.

A brand’s path to consumer engagement is more complicated now than it’s ever been. Though technological innovations have made reaching consumers so much easier, it’s the content that’s become hit-and-miss. The reason: changing media distribution formulas.

Old vs. new brand distribution formulas: In the ’90s, the brand website was the centrepiece of the media distribution strategy commonly called Owned and Operated (O&O). Agencies supplemented O&O campaigns with media buys that could guarantee the greatest number of eyeballs seeing their clients’ ads. Their most important KPIs: impressions, CPM, and RPM (revenue per thousands).

The 2000s saw the advent of more sophisticated digital technology, especially websites and the new mobile operating systems of the time. Media folk wised up to the value of running ads across a wider array of sites, including other brands’ properties, and the term “integrated” became the symbol for campaigns that, to greater or lesser extents, deployed brand messaging across traditional as well as newly interactive channels.

Jump forward to 2010 and beyond, where APIs, social sharing, and open content networks have all but obliterated the old way of doing things, including SEO. Now, a brand’s path to consumer engagement is almost entirely mediated by a handful or so of major tech players who take the lion’s share of ad revenue each year. To this point, Google and Facebook together took half of global mobile Internet ad market revenues in 2015 and, in a market that’s still shrugging off the aftereffects of the global economic downturn, these two companies grew a total of 26.2%. In contrast, mega-agencies WPP, IPG, and Omnicom saw an average revenue growth of only 2.3%.

[For more on the winners and losers in the digital ad market, watch Galloway’s “Gang of Four: Apple/Amazon/Facebook/Google”.]

Concentrating omni-channel broadcast traffic in the hands of the few. Numerous studies detail that while most consumers maintain several dozen apps on their mobile devices, the majority of the time they spend using apps is concentrated on about five particular ones (note the usual suspects): Facebook, YouTube (owned by Google), Maps (most often Google’s version), Gmail (owned by Google), Facebook Messenger, and Instagram (owned by Facebook).

As these tech giants move further into the advertising game, ad traffic will continue to be mediated by an increasingly small group of mar-tech players. And that’s not a good thing. When big networks become the platform for ad-serving, it means that the Facebooks, Googles, and Apples of the world become an additional, semi-permeable layer between the brand and the consumer. These networks want to carry branded content within their environments, but they’ll dictate the rules of engagement — or at least, arbitrate using their own platform parameters.

If integration was the hallmark of advertising in the 2000s, today’s ad game is all about third-party syndication. Gone are the days when you could develop a campaign plan using various channels and set your SEO to optimize results. For most media companies, organic traffic is key to their monetization balance; it’s still a significant element in planning and buying at many agencies. But SEO is slowly becoming less effective in the face of omni-channel content syndication by networks like Facebook and others.

Over the course of my career, I’ve seen sites move from an average of 40% organic traffic from Google Search to barely 15%, with the balance flowing from platforms like Facebook. The challenge is that these social networks continue to look for ways to monetize the user experience on their platforms, for their own benefit. In 2011, eMarketer projected Facebook’s display advertising revenues to grow 80.9% to $2.19 billion. But such successes could only hint at the revenue-building juggernaut that Facebook would become: By 2015, eMarketer estimated that Facebook would take 64.8% of all social network ad spending worldwide — totalling $16.29 billion in revenue — driven to a degree by Facebook’s ongoing monetization initiatives on Instagram.

Your branded content > Their omni-channel revenue. How do these companies rack up so much revenue? One way is by serving other brands’ content and keeping users on their platforms for as long as possible. They want to keep the experience — and the users — within their own environments, so that the revenues go back into their own coffers. And each company continues to come up with more options to take advantage of publishers’ content, including:

  • Facebook’s Instant Articles: Touted as a new way to create interactive articles, leveraging the same technology used to display content in the Facebook app, but at a speed that’s ten times faster than the standard mobile web. Publishers have two ad-serving options: sell ads within articles and keep the revenue or use Facebook Audience Network to maximize revenue, but pay for play.
  • Apple News: Apple’s version of news aggregation, where top sources are brought together based on users’ identified topical interests, with print-like editorial layouts, typography, photo galleries, videos, and animation — all automatically optimized for all iOS devices. And straight to the point: “News offers great business terms for publishers” — something that no other similar platform actually notes on their sites!
  • Snapchat Stories: Designed to “honor the true nature of storytelling — in sequential order with a beginning, middle and end,” video Stories string together Snaps to create a narrative that lasts for 24 hours. Ads appear inside premium or Snapchat- or community-curated contexts.
  • LinkedIn Pulse: Like many popular social platforms, Pulse started as a class project, in 2010. Five years and 30 million users later, and the app is LinkedIn’s content machine, powering much of the platform’s homepage, feeding into a weekly email digest, and publishing original content from LinkedIn members.
  • Google Play Newsstand: Google’s attempt at news and information aggregation, categorized by content source (e.g., by publication name, like Maclean’s, The New York Times, etc.) or by themes that mirror traditional magazine categories (e.g., Entertainment, Women’s and Men’s Lifestyle, etc.) Runs the same ad-serving functionality as Google’s websites; articles are displayed using continuous scrolling and ads are inserted inline.

Meanwhile, Twitter’s announcement of an extended character-count raised some serious chatter earlier in the year (and significantly affected Twitter’s stock prices, too). The new limit is expected to launch in Q1, and at 10,000 characters, will enable users — including publishers and brands — to publish long-form content like articles and branded content, whereas the 140-character limit had restricted such posts in the past.

Expectations are also high for the official launch of Google’s Accelerated Mobile Pages (AMP) project — an open-source platform designed to make web pages load more rapidly on mobile devices, and meant to take Facebook’s Instant Articles and Apple News head-on. In technical preview since October 2015, and with its first accelerated pages will be available early this year, numerous publishers and advertisers have already gotten on board. Among them, The Globe and Mail and Postmedia, The New York Times, The Wall Street Journal, The Economist, Hearst Media, Buzzfeed, and many more have signed on to provide content, and Outbrain, AOL, OpenX, DoubleClick, and AdSense are developing ads that align with the platform’s quick-loading specs.

[For more info on the thinking behind AMP, check out this post.]

And in an extension of the AMP project, Google and Twitter have teamed up to offer their own version of Instant Articles, but with a twist: The companies now allow mobile users who click on a link in a Tweet or in Google Search results to see full-article pop-ups on their screens. A key differentiator from other companies’ “Instant” apps is that this platform won’t host publishers’ content, opting instead to display cached web pages from publishers’ sites, including the original ads the publishers’ sold next to the respective stories — a boon for advertisers who are looking to stretch their marketing investment.

At this point, you’re asking: What’s the lesson to learn from this? Simply, publishers need to get with the times, and embrace the fact that SEO is no longer effective, that social traffic as a referral mechanism is not enough, and that third-party syndication is becoming the new normal. The retail sector had to come to terms years ago with the fact that their primary means of marketing (the paper flyer) was quickly becoming outdated in the face of changing consumer reading and shopping patterns. Their response: Accept that their audience-targeting strategies had to change if they were going to stay competitive in an increasingly digitally-oriented marketplace.

Most retailers now understand that digital media distribution of retail promotions and content — predominantly served by third-party syndication platforms like deal sites and shopping hubs like Google Ads — is the reality in which they do business. It’s now up to publishers to embrace this reality, and devise ways to strike a balance from a revenue perspective that will keep them in the media game moving forward.

In Part 3, we’ll discuss the paradoxes of monetization in publishing today, including how content quality, targeting, and traffic go hand-in-hand in revenue equations.