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The Risks of Being All-In on Facebook and Google

The Risks of Being All-In on Facebook and Google

Ad-supported publishers and broadcasters are increasingly struggling to generate revenue growth in the face of the Google and Facebook duopoly, which accounted for approximately 99% of the $2.9 billion in year-over-year digital advertising growth in Q3 2016. It's no wonder that many publishers are adopting "if you can't beat 'em, join 'em" approach by relying on aggregation platforms like Facebook and YouTube to generate video views and hopefully revenue from a slice of some of that video ad growth. Many experts agree, however, that relying exclusively on Facebook and Google/YouTube for video distribution is not a winning strategy and is ultimately a self-defeating proposition that is bad for monetization and bad for the brand.

Bad for Monetization
Premium publishers that go “all-in” on publishing via platforms like Facebook and YouTube lose out on generating user data that ad buyers find valuable and are willing to pay for.  In contrast, this approach benefits aggregators like YouTube and Facebook, for a few reasons: they get premium publishers to fill their properties with content, in most cases for free, and they get access to user data which makes them more even more valuable to advertisers. It doesn’t take much to see that this is a bad deal for publishers who are literally giving away their content and audience data free of charge in the hopes of recovering some of the cost of running a publication online. Publishers would do much better by building a moat around their content and user data to negotiate top dollar from media buyers on their owned and operated properties. What media buyer representing Expedia or Toyota wouldn’t love to know how many times a user came back to publisher’s site to read an in-depth review of a product, service or location?  These are strong indicators of intent and extremely valuable to media buyers.

Moreover, direct ads sold by publishers are also subject to downward pressure from Google and Facebook. Over time, direct sales efforts can and will be compromised with an "all-in" approach.

Why would media buyers engage in a direct ad buy with a local publisher's sales team when they can simply spend their dollars on Google and Facebook to get access to the same content and users at a cheaper price via algorithmically-driven programmatic ad sales?

One needs to look no further than recent reports which show a trend that CPMs are rising for some social media platforms -- leading to increased profits for them but not for their publishing partners.

Bad for Brand
Google and Facebook are the "big-box” stores of online content - there's a wide spectrum of content available on these platforms and not all of them share premium publishers’ dedication to journalism or to journalistic standards. Publishers that rely on a Facebook or Google-only strategy risk devaluing their content by placing it alongside other content of dubious and inferior quality. Think of the recent advertiser backlash highlighted by ads being pulled from Google and Youtube over concerns that ads were being displayed next to objectionable content. Google has responded that it is taking action over inappropriate content on its ad networks, but publishers still have to play by the rules set by Google. Ultimately the control is in the realm of Google, and not the publishers, even though it is their brand value, many decades in the making, that is being eroded.

Despite the costs associated with running an owned and operated website, the risk pales in comparison to the costs of ceding control of monetization and brand value to the tech giants of Silicon Valley.

The future of publishers squarely depends on which of the walled gardens they want to build their business on, or more accurately, for which they’re willing to be sharecroppers.