The Facebook content game: Who will win and who will lose?
Last month, I wrote about media companies that receive most — if not all — of their traffic from Facebook. These websites, which specialize in “viral traffic” and “highly-shareable” stories, have seen monster growth in a short span of time. In that article, I highlighted some of the major risks and potential challenges in this high-stakes game.
In what can perhaps be called an illustration of how fast-moving and unpredictable the world of viral traffic is, since then some game-changing news has already come to pass. In a major release, Facebook announced it would increase the role that content plays in user’s newsfeeds.
But there was a catch.
In that same announcement, Facebook also declared that some content would be phased out or de-emphasized while other material would receive a boost in its algorithmic decision-making. In other words, there will be winners and losers.
A simple tweak of the algorithm, while potentially powerful, is not the only game changer. Facebook’s decision to double-down on external content means that future, unannounced changes are inevitably coming down the road. External content is firmly at the center of Zuck’s radar.
But which media properties and other companies will benefit from this new direction that Facebook is taking?
The big beneficiaries in this shakeup will be Buzzfeed, Upworthy, and any of the "social content" properties that have raised large venture rounds.
Facebook’s announcement implies for viral content producers there will be no “Zynga moment,” when Facebook pulled the rug out from it. This means the formula that has been working the last two years will continue to work, at least for now. So traffic may decrease, but 50+ million monthly visitors from one source offers plenty of cushion. The fundamentals won’t change.
Another reason BuzzFeed and Upworthy should be smiling: arbitrage. The concept of “paying money to make money” has not yet become an input in the equation but might soon. Facebook is helping content publishers make a lot of money, and at some point they will want a piece of the action. BuzzFeed already spends money promoting content that has sponsorships behind it. Since it does not run media on the rest of its content (for now), there is little incentive to do it on the ‘everyday’ stories and listicles we all know and love.
What, though, is to stop Facebook from forcing Buzzfeed's hand? What if Facebook creates a "premium publishers network" where stories gain extra virality for a fee, and those that don’t pay are de-emphasized?
We have already seen Facebook do exactly this when it extracted 30 percent of Zynga's proceeds.
Rather than fear such changes, however, BuzzFeed and Upworthy should embrace them. They have cash war chests and can build and expand their advertising and marketing efforts to monetize those eyeballs. Smaller competitors, such as Viral Nova and Distractify, cannot.
If anything, Facebook would be wise to charge media properties for content promotion, as those that can afford it would gladly pay, if for no other reason than to subvert the ‘crowding out’ effect that will likely emerge in coming years. In short, why wouldn’t BuzzFeed pay to stay atop the Facebook food chain, especially if it means imitators fall backwards?
In a strange way, it's fair to everyone. Facebook should be entitled to a cut of Buzzfeed's proceeds. Its 1 billion users benefit from engaging content, but that isn’t enough. BuzzFeed and Upworthy exist almost entirely because of Facebook’s distribution. It’s hard to argue that Facebook should get nothing for that. What’s more, BuzzFeed’s many imitators deserve to fall behind. In some cases, these imitators have reverse engineered the model in a ‘pixel for pixel’ manner.
The second winner will be old general interest magazines like Time Magazine and The Atlantic. For them, Facebook has proven to be a saving grace, and the good times will keep on rolling.
Not all newsstand stalwarts will benefit, though. Don’t expect BusinessWeek or Better Homes and Gardens owning your newsfeed any time soon.
Time, on the other hand, can write about whatever it wants. It is already the kings of the “list” concept, having captivated America with it since 1927 with its chatter-churning Person of the Year Awards. The Atlantic also has free reign to create a broad range of content and is more digital-savvy than most.
I cannot, however, imagine BusinessWeek producing broad-appeal content that would induce grannies to click on the share button. Hopefully, we are past the days when cats rule our news feed, but they won’t be replaced with reports on liquefied natural gas futures.
Further, Time and The Atlantic will benefit because distribution is the lone missing piece in their once-powerful formulas. Make no mistake, The Atlantic has an existing sales team that knows what it is doing. It also has a brand that can extract premium CPM’s. The only thing it doesn’t have is a high audience number in Comscore, which it failed to achieve when it ignored the once-dominant role that Google played in determining which site got visitors and which did not.
The third big winner will be AdTech, primarily companies that provide audience targeting products.
This could be the decisive battle in what has been a decade-long war of attrition for the entire venture-backed AdTech world. For those unfamiliar with this industry sub-sector, it has been the VC equivalent of a ten-year trip to Disneyland with little kids in the car impatiently asking, “Are we there yet?”
Not a single analyst can say — with confidence — whether AdTech is a success or a failure. The string of recent IPOs has only added uncertainty. On one hand, these companies are beginning to IPO (after years of waiting for fertile market conditions). On the other, their post-listing prices have been disappointing. They missed the boat on the huge run-ups that Facebook, Yelp, Netflix, and Tesla have seen.
But Facebook’s recent announcement could change that.
The biggest winners in the Facebook traffic game are sites with the broadest demographics. This is a problem for publications and advertisers alike. Few products are marketed to “every American under the sun.” Most seek to reach the young or the old, men or women, the rich and the educated, professionals or stay-at-home parents.
Upworthy, on the other hand, reaches everyone.
You can't discount the huge numbers that Upworthy, Viral Nova, Elite Daily, and the like produce. Give them credit where credit is due. But how can anybody comb through those masses to find the gem audiences? What happens when Adidas decides to market a new soccer shoe to young Hispanic men? In this case it would be a waste to reach elderly white women. Such eyeballs are useless to a sneaker company (unless it is marketing sensible shoes with built-in orthotics). Therefore, Upworthy requires technology partners to make sure that Adidas ads appearing solely to the 2 to 3 million men (out of 50+ million readers) who fit the bill.
At long last, audience targeting technology has a growing set of large-scale publishers that need their services to be viable in conversations with advertising agencies.
The problem solvers now have a problem to fix.
It pains me to point out who will suffer the most, but newspapers and investigative journalists will continue to feel the burn, and Facebook will only make it worse.
Breaking news has been custom-designed not to work on Facebook. Even if somebody like the Washington Post breaks a big story, it’s unclear if it will get the traffic from it. The arbitrary nature of the Facebook algorithm and share-ecosystem means that a publication with shinier buttons or a better social media intern could easily gain the lion’s share of visits.
People who share content do not care who broke the story. They are just as happy to share the Gawker aggregation-meets-snark version. Actually, that is precisely what they will share. Objective (and vanilla) voices do not perform well on Facebook.
The art of writing Facebook-optimized headlines is another area of weakness for traditional newspapers. The founders of ViralNova recently spoke with Business Insider about their secret headline formula (You Will Never Believe the Results!) Unfortunately, Pulitzer-winning newspaper staffs won't title every scoop along the lines of…
You Won’t Believe Who Defeated Truman In This Year’s Biggest Election Surprise!
Thugs Have Broken Into the Watergate Building, and President Nixon’s Response is Going to Shock You!
President Kennedy Has Been Shot, and Jacqueline’s Reaction to the Incident Is Unforgettably Sad and Inspiring (Click for Video)!
You get the idea.
If you thought traditional newspapers were holding their ideological ground by refusing to stuff keywords into headlines back in 2009, just wait until the seasoned editors find themselves taking orders from their 23 year-old social media hires.
Breaking news has another built-in problem. It doesn’t last a week. The most viral stories on Facebook tend to give their publishers a good 100+ hours of inbound juice. There is usually one day when the story peaks, and a few days before and after when the story still drives monster traffic. That is when we talk about semi-evergreen content (inspiring stories, funny pet videos, etc.). It won’t, however, work for a celebrity’s death that gets promulgated and reaches saturation over the course of a few hours.
The business of breaking news sucks.
The second big loser will be Twitter. It cannot drive nearly as much traffic as Facebook. It’s quaint to hear media CEOs talk about “how well we are doing with Social Media,” when what they really mean is “how well we are doing with Facebook.”
Don’t get me wrong, Twitter is a great company, one that I am cheering for. Dick Costolo is a serious candidate for CEO of the Year for what he did following the departure of two high-profile predecessors. But Twitter cannot drive traffic anywhere near the scale of Facebook. It’s not in its DNA.
Instead, Twitter has built a community inside of its own ecosystem. A user does not need to leave Twitter to find engaging debates. And it will find success somehow as a result. In the short run, though, it may be a victim of its own success, as more publishers (and, consequently, brands) begin to recognize how powerful an engine Facebook can be for curating external content.
Several companies will either evolve or die as the world around them changes.
This describes the demographic-focused niche players, which includes PandoDaily and my own websites, Bustle (which I currently run) and Bleacher Report (which I previously co-founded). Other key businesses in this group are category-leaders like TheVerge, PopSugar, Business Insider, and Refinery29.
Media properties like these have thrived by marrying innovative new advertising products with traditional methods of selling inventory. They may not share much in common editorially, but they all have the same pitch when meeting with advertising clients:
“Our website is the best place to reach [Target Demographic] who are passionate about [Topic Covered].”
Indeed, as much as its editor-in-chief might deny it, TheVerge is in the business of reaching young men who make a lot of money and care about tech. Female readers are welcome, but TheVerge has built their business pitch entirely around men, men, and more men. Similarly, Refinery29 is in the business of reaching trendsetting women with big wallets and full-length bedroom mirrors. PandoDaily counts the movers and shakers of Silicon Valley -- and those who aspire to be -- as its hardcore base.
They all make a lot of money doing it.
But what happens when they face competition from sites that appear overnight and garner 5x their traffic within six months? The short answer is they will have to double-down on their audience-centric story. Is it possible for TheVerge to garner 50 million monthly visitors one day? Sure. They can play the BuzzFeed game all they want, and who knows? Maybe it could work. But then it loses its entire advertising narrative, and that would cut deep.
Media properties with large, existing advertiser bases are foolish to disrupt their current audience composition.
My opinion — and I am betting heavily on this — is that advertisers still prefer a tightly-focused audience where demographics, editorial voice, and innovative advertising products congeal. Only time will tell I'm right. If there is one lesson in advertising, it is that things change slowly.
Why else do page views still matter when they are a terrible metric and mechanism. And why do banner ads even exist? To some extent, BuzzFeed is like the lone wind energy farm in a world full of coal plants. It’s new and exciting, and, its strategy works. But it represents a tiny fraction of the spectrum.
To see how all this will shake out I recommend you bet on the past and present while thinking often about the future, and be sure to pay close attention to Facebook. You'll be glad you did.