With Facebook Instant Articles, Publishers May Find 70 Cents Is Better Than a Dollar

With Facebook Instant Articles, Publishers May Find 70 Cents Is Better Than a Dollar

Publishers are still digesting the details of the new FaceBook Instant Articles initiative, which in the first 24 hours has set off reactions ranging from panic to confusion to envy across the online news landscape.

There are many questions for media executives to consider about the program, which allows whole articles and videos to be published to the social media site’s mobile app. One major consideration is whether Facebook can help publishers generate revenue from their mobile audiences more successfully than they can themselves.

The answer? Quite possibly, because Facebook has figured out what other online ad sellers haven’t: how to effectively target and track mobile ads.

As first reported by the Wall Street Journal, participating publishers will keep 100% of the revenue generated from advertising placed alongside Instant Articles, provided they sell and serve the ads themselves. They get a 70% cut if Facebook sells the ads through its Audience Network product.

But 70 cents on the dollar could be better than a whole dollar. Let me explain.

For years publishers have struggled to successfully generate revenues from mobile ads, and there’s no reason to believe they’ll be any better at it if they sell their own ads for Instant Articles. It’s possible Facebook could generate a whole lot more revenue by selling the ads – and 70% of that larger number may wind up the better outcome for publishers.

Facebook appears confident it can help publishers monetize their mobile audiences more successfully, according to executives at media companies involved in the Instant Articles program.

Indeed, Facebook has already shown it can make a lot of money with mobile ads, and marketers say they’re more confident buying mobile ads from Facebook than most other companies. The numbers prove it. According to eMarketer estimates, Facebook will collect around 33% of all mobile display ad spending in the U.S. this year.

To target its ads, Facebook collects data on users’ interests and activities across its own network to understand their tastes and behaviors, but it also tracks which sites they visit and when they click on links thanks to its network of “Like” btns across the Web. Those signals are powerful tools to help it connect advertisers with the right users.

Perhaps more important, Facebook also does a good job tracking the effect of its ads by following users across devices using their Facebook accounts, instead of using ineffective methods such as cookies. When it comes to mobile tracking and measurement, the rest of the online ad market is playing catch-up.

Facebook says it’s still working with its first group of publishing partners to “understand their ad requirements and define guidelines that support their business models.” The New York Times, BuzzFeed, National Geographic, the Atlantic and NBC News are among the early participants.

Bob Cohn, president and chief operating officer at the Atlantic, said he’s optimistic about the opportunity and the advertising economics behind it.

“We think this is going to be a good experience for readers and advertisers,” he said, adding, “If for some reason it isn’t, we still have control over how many or how few stories we put into the instant article template.”

But publishers still have concerns about relying too heavily on Facebook to drive their mobile businesses, specifically because of the power Facebook may establish over them.

Think of it this way: marketers want to get their messages in front of people who read the New York Times or the Atlantic or the NBC News site, but they don’t necessarily care how or where they reach those people. It doesn’t always matter if they catch them while surfing the news site in question or elsewhere on the Web, including on Facebook.

The more Facebook knows about those readers and their consumption habits, therefore, the better informed and more effective its ad products may become. That’s a scary thought for publishers. After all, there’s a finite number of ad dollars to go around, and ultimately any company selling advertising is in competition for them.

Facebook is offering publishers a certain amount of freedom if they sell their own ads. They’re free to insert those ads onto Facebook’s pages using any “ad serving” tool they wish, the company said, including those offered by companies such as Google and AOL.

At launch, Facebook said the ad formats it will allow in Instant Articles include banners – one large one or two small ones for every 500 words of content. Some publishers are running their own custom ad units inside Instant Articles. BuzzFeed, for example, is running a link to a branded post that appears similar to the ones on its own website homepage.

But Facebook said it won’t allow publishers to work with third-party companies to sell that ad space. In other words, if publishers can’t sell their Instant Article ads they can let Facebook sell their remnant space, or let it go unfilled. Generally speaking, publishers don’t like to leave money on the table.

Instant Articles is, therefore, Facebook’s way of giving publishers a taste of its secret mobile sauce. Publishers are free to sell their own ads alongside Instant Articles content if they want to, but over time they may find Facebook ads make them more money.

The bigger question is if they’re receptive to the tradeoff that increased revenue comes packaged with — which is more reliance on Facebook.

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Suite of Free Tools

$0.45 USD - $4.00 USD

Note: The accepted formula that Auxiliary Mode Inc. uses to calculate the CPM range is $0.45 USD - $25.00 USD.

The range fluctuates this much because many factors come into play when calculating a CPM. Quality of traffic, source country, niche type of video, price of specific ads, adblock, the actual click rate, watch time and etc.

Cost per thousand (CPM) is a marketing term used to denote the price of 1,000 advertisement impressions on one webpage. If a website publisher charges $2.00CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The "M" in CPM represents the Roman numeral for 1,000.

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