Barking Heard Just A Few Seconds Into The Digital Park

Michael Hedges March 30, 2015 Follow on Twitter

Major online platforms have been inching toward the publishing realm, off and on, for several years. Content producers are meeting this trend head-on, more or less, by forming alliances to bid-up negotiating leverage with media buyers and, to some extent, readers and viewers. The recent flurry is but the next round of big dogs circling the red meat of advertising.

Facebook seems to be closing in on hosting native content from the New York Times (NYT), National Geographic and BuzzFeed, reported the New York Times (March 23), in a yet-to-be revealed content and revenue sharing trial. Big numbers mean everything and Facebook has a huge global reach, just under 1.4 billion monthly active users at the end of January out of 2.08 billion social platform users worldwide, both numbers growing 12% year on year. Facebook’s mobile platform users have jumped 22% year on year to 1.1 billion.

"Facebook is a bit like that big dog galloping toward you in the park,” wrote the late David Carr, arguably the most important media critic this century (NYT October 26, 2014). “More often than not, it’s hard to tell whether he wants to play with you or eat you.” The aforementioned publishers seem quite willing to find out.

Such is the present digital moment. Search engine traffic to online publishers remains robust although traffic to all websites - including those featuring cute puppies - has shifted in the last year and a half in favor of social networks. And every publisher in the world has heard the story of German colleagues being dumbstruck by a huge traffic drop when Google stopped indexing them all last year in a copyright (read: revenue sharing) dispute. “We are afraid of Google,” declared big German publisher Axel Springer CEO Mathias Döpfner about a year ago.

For Facebook it’s all about the base, so to speak; keeping users on the Facebook site and, thus, seeing more ads. Hosting native content - no links to other sites - strengthens that brand attachment and, importantly, hands more user data over to media buyers. Mobile users - the fastest growing digital segment - will no longer face eight seconds of metaphysical anxiety waiting for the desired content to load from an external site. And, too, those eight seconds are coveted by media buyers.

The Facebook news feed, said the NYT report, will have a “new format.” That probably has less to do with appearance than the algorithm - statistical model - used to select items for that customised look. Those videos created by the NYT, BuzzFeed, National Geographic and others eager to share could, with a simple tweek, jump ahead of the one with Fido the Dog chasing the neighbor’s cat. For users wanting to relive the past Facebook is rolling out “on this day,” a feature filled with previous posts from any given day.

Rolling out new features is Facebook’s development strategy, perhaps more than the features themselves. The chat feature Messenger has been overhauled to bring users closer to their favorite retailers. Mobile chat apps are overpowering email among the highly connected. Facebook’s Messenger is entering the online payment business, so far limited to the US.

As one of several big dogs in the digital park - Google, Amazon, Yahoo, Alibaba and others yapping away - Facebook has plenty to spend on “user experience.” Facebook acquired instant messaging platform WhatsApp a year ago for $19 billion. It operates independently, more or less, of Facebook and has 700 million active users worldwide. Voice messaging on iPhones is coming to WhatsApp “in a couple of weeks,” said co-founder Brian Acton, quoted by Venture Beat (March 25). Mobile video sharing platform - 15 seconds only - Instagram was acquired two years ago for a paltry 1$ billion.

Powering the feral beasts are the algorithms and the requisite computing power that transform data - literally everything digitally known - into money, mostly through programmatic ad sales. In this digital business model users are important, even necessary, but mostly datasets to be acted upon. Content, then, is only dog food; sometimes red meat, mostly canned, regularly consumed with as little waste as possible.

Content producers of all species are understandably alarmed, as Herr Döpfner noted. They are not without advantages, a well-honed survival instinct being one. As the pre-digital advertising model died an inglorious death subscriptions - online paywalls - because the rage. “Make them pay,” ordered Mr. Murdoch. Subscriptions to newspaper websites have stalled while subscriptions to video on demand portals like Netflix soar.

Hardly a surprise, then, is a more vigorous approach to digital advertising. Challenging the big tech companies for their prowess in programmatic advertising, on a relatively smaller scale, is the recently introduced Pangaea Alliance of UK publisher The Guardian, UK-based business news publisher Financial Times, CNN International and Thomson Reuters. Data collected from online users, about 110 million worldwide, will flow to media buyers programmed for high quality spending.

“As the world becomes more complex and networked, Pangaea will give advertisers one single programmatic solution for driving influence at scale, allowing them to get cut-through in an increasingly fragmented market using the latest ad serving technology,” said Guardian revenue director Tim Gentry in a statement, quoted by AdAge (March 18). The buy and sell technology is provided by Rubicon Project, a California ad tech company that focuses on quality reach over quantity, so says the company website. In addition to the Pangaea Alliance, Rubicon is active in France, Denmark and the Czech Republic as well as, obviously, the US, where it ranks 3rd among automated ad sellers, according to comscore (January 15), after Google AdEx and OpenX.

The advertising people are absolutely thrilled having so many friends. Big media buyer Carat sees a 4.6% increase in global ad spending this year over 2013 and even more (5.0%) in 2016, forecasts released March 24th. Digital advertising is “the star performer,” 21.7% of the total, still growing by double digits, forecast for 25.9% share in 2016. Mobile ads will grow by 50% this year and online video by 21%.

“The strength of digital continues to dominate discussions and the new distribution of spending,” said ah house Dentsu Aegis CEO Jerry Buhlmann in a statement. “With a quarter of the global population now owning and relying on their smartphones daily, they are our second brain in our hands. Mobile dominates the way consumers access information, view content, browse products, and purchase goods.” Dentsu Aegis owns Carat. TV still holds the lions share of ad spending, 42.7% in 2014, growing about 3% this year and next.

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