At This Table The Dealer Owns The House

Michael Hedges June 13, 2016 Follow on Twitter

This is a story about a card game, high stakes. There is no better analogy for today’s media sphere. When the stakes are low, the game can be fun. Raise the stakes and it gets very serious. We have wild cards, poker faces, good hands and bad hands. We play the cards were dealt and the house always wins.

Facebook – the company – is in the internet-enabled development (IED) sphere; inventing, monetizing, inventing again, monetizing further, investing. That space it shares with the likes of Adobe, Alphabet (née Google), Amazon, Apple and several thousand others. Those at the top of the IED list invest most in maximizing their trademark products; hence, Facebook owns Messenger, WhatsApp and Instagram. But their eye is always on the next big thing.

In the recently released Millward Brown/WPP BrandZ ranking of brand value Facebook rose 44% year on year to US$102.5 billion and 5th place from 12th. The Google brand returned to the top spot, valued at US$229.2 billion, bumping Apple to number two. Microsoft is still number three. Viewed mostly as a retailer rather than a technology company, Amazon also moved into the top ten, 7th from 14th, valued at US$98.9 billion. Noting the Facebook and Amazon rise into the top ten, the report called “disruption” a “dominant trend.”

As a social media portal, Facebook does enjoy a reputational advantage, apart from starring in the generation-defining movie The Social Network, reaching 1.65 billion monthly active users worldwide in Q1 2016, assessed by statista.com, roughly 51% of all – that would be ALL – internet users. Getting to the fine print, 85% of Facebook’s monthly active users (yes, the social media literate refer to them as MAUs) are outside the US, 91% are Millennials and 90%, 1.51 billion, access via their mobile phones, more than half exclusively via mobile phones. A lot of people, more than China and Indonesia’s combined population with Texas thrown in, like Facebook.

Facebook’s omnipresence has been decidedly rewarded. Everything the company does is meticulously examined, reported and criticized. Characteristic of the digital media age, every malefic can be attributed to Facebook. When you’re everywhere there’s nowhere to hide or, in this case, get a break.

A chorus of objectors spring to life with every change, adjustment, deletion or addition to the Facebook website and surrounding tools on web and mobile platforms. Right-wing media people in the US and the politicians who like them came unglued, briefly, last month after a poorly sourced article in tech news portal Gizmodo suggested “conservative” points of view had been censored, the Trending Topics feature being “unfair.” CEO Mark Zuckerberg, COO Sheryl Sandberg, VP Joel Kaplan and independent board member Peter Thiel interrupted their busy schedules and invited the complainers to talk. The “controversy” became a Trending Topic for two whole days.

Shortly thereafter the Trending Topics sidebar changed, no longer using “external” sources to determine newsworthiness and giving more emphasis to hosted videos. Last week Gizmodo publisher Gawker Media filed for bankruptcy protection following a US$140 million privacy lawsuit award favoring a former professional wrestler’s complaint about a video posted on its main blog site featuring a few seconds of horizontal hula with a Florida DJs wife. The wrestler, known as Hulk Hogan, received financial support for his legal quest, US$10 million reported the New York Times (May 24), from the aforementioned serial tech investor and PayPal co-founder Mr. Thiel. Gawker Media is appealing the court award, selling its business to the highest bidder and “looking into” suing Mr. Thiel for “tortuous interference, racketeering or other potential claims,” reported Forbes (June 11). This is the way the big guys play.

Facebook’s huge reach, particularly through mobile platforms, is widely appreciated by content publishers, not all approvingly. The major contention, of course, is competition for mobile advertising, the much coveted growth segment of everybody’s favorite revenue stream. While legacy publishers and broadcasters moaned and groaned about old magic tricks not working, media/tech developers entertained the media buyers.

What Facebook, Google and others do – or might do – with digital user information – cookies and much more – scares privacy advocates and just terrifies all who might want to also commercialize what is commonly referred to as Big Data. Laptops, PCs, tablets, smartphones and “the internet of things” contribute to this massive dataset. Crunched, sorted and segmented at lightning speed the collected wealth and, notably, inferences from it are a media buyer’s dream come true. They now know everything and can drop-in – or pop-up – messages instantly.

After a decade of hand-wringing a group of German publishers and broadcasters, including Axel Springer and Bertelsmann/RTL, are pooling their datasets, crunching provided by Deutsch Telekom subsidiary Emetriq, to build a data management platform. “Nobody is suffering more than publishers and (advertising) sales houses in Germany, because they don’t have enough data, and their data silos will never be able to aggregate enough to come even close to Google and Facebook,” said Emetriq CEO Daniel Neuhaus, quoted by Digiday (June 8). “Even now we’re pooling it; we’re still nowhere near but we’re getting closer in quality and quantity of data.”

The pay-off for German media houses could be huge, in relative terms. Facebook’s ad revenues for fiscal 2014/2015 were US$11.49 billion, up 63% year on year, estimated by Zenith Optimedia (ZO) in its Top 30 Global Media Owners list released at the end of May. It is the fastest growing media/tech company by revenue, now 5th in the world, for the second year running. “Facebook has actively embraced mobile technology in order to encourage its users to visit it regularly and frequently throughout the day, while designing its ads to blend seamlessly into the content feed,” explained the ZO report. Axel Springer, for its part, just acquired US-based digital data cruncher eMarketer.

Facebook’s Instant Articles feature got off to a rousing start, allowing published content into its walled mobile garden. Hundreds of sources lined up to be included even if the revenue sharing deal wasn’t stunning. It’s the reach that matters, goes the argument. Even Google engineers followed with their similar Accelerated Mobile Pages (AMP) feature all in the interest of preventing the dread Mobile Waiting Millennial Boredom Syndrome.

Alas, evidence persists that text at any speed just doesn’t cut it for the mobile-enabled. Crunching “engagement” rates (likes plus shares plus comments) for articles from the top 10 English-language publishers on Facebook, social media analytics portal newswhip.com (May 30) determined a precipitous decline between July 2015 and April 2016. Videos, on the other hand, move the mobile-engaged. One example given stands out: During July 2015 and April 2016 CNN had roughly the same number of posts (about 1,000) on its Facebook page, native videos posted rose from 22 to 220, engagement soared from just under 100,000 to 2 million.

“In the last few years, Facebook has been shapeshifting into a publisher and primary source of news,” wrote Columbia Journalism Review (June 10). It’s a publisher because it takes content and puts it out there in the new media ether. It’s a primary source because it has first mover advantage in mobile media build-outs just as that platform has become THE platform for a lot of folks, notably those Millennials ready and able to claim a new platform and the media buyers who adore them. “What’s clear in this arrangement is that Facebook holds the cards.”

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