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Zuckerberg Sucks Air Out of CES for Brands

Any real news out of CES this week was drowned out by either the two-hour power outage that plunged the main hall into darkness or Facebook’s announcement that it was once again tuning its newsfeed to promote meaningful interactions among individuals at the expense of all the publishers who used it as a lifeline after all the brands left their sites to advertise on  FB. The brands, by the way, will also get the shaft.

Part of this seems to be a response to the fake news controversy from the last election. But here’s how Zuckerberg puts it on the site:

“One of our big focus areas for 2018 is to make sure that the time we all spend on Facebook is time well spent.

We built Facebook to help people stay connected and bring us closer together with the people that matter to us. That’s why we’ve always put friends and family at the core of the experience. Research shows that strengthening our relationships improves our well-being and happiness.

But recently we’ve gotten feedback from our community that public content — posts from businesses, brands and media — is crowding out the personal moments that lead us to connect more with each other.

It’s easy to understand how we got here. Video and other public content have exploded on Facebook in the past couple of years. Since there’s more public content than posts from your friends and family, the balance of what’s in News Feed has shifted away from the most important thing Facebook can do — help us connect with each other….

The research shows that when we use social media to connect with people we care about, it can be good for our well-being. We can feel more connected and less lonely, and that correlates with long term measures of happiness and health. On the other hand, passively reading articles or watching videos — even if they’re entertaining or informative — may not be as good.

Based on this, we’re making a major change to how we build Facebook. I’m changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions.

We started making jchanges in this direction last year, but it will take months for this new focus to make its way through all our products. The first changes you’ll see will be in News Feed, where you can expect to see more from your friends, family and groups.

As we roll this out, you’ll see less public content like posts from businesses, brands, and media. And the public content you see more will be held to the same standard — it should encourage meaningful interactions between people.

For example, there are many tight-knit communities around TV shows and sports teams. We’ve seen people interact way more around live videos than regular ones. Some news helps start conversations on important issues. But too often today, watching video, reading news or getting a page update is just a passive experience.

Now, I want to be clear: by making these changes, I expect the time people spend on Facebook and some measures of engagement will go down. But I also expect the time you do spend on Facebook will be more valuable. And if we do the right thing, I believe that will be good for our community and our business over the long term too.

Welp. This was more relevant than whether AR or VR will go mainstream first (best guesses are for AR because no glasses) or who will advertise what in our connected homes. We’ve never thought the digital media industry belonged at a gadget show anyway.

Facebook Shifts Again

Facebook has decided, at least in 2018, to deprioritize publishers, leaving those who invested heavily in support for Instant Articles and videos with money that might have been better spent with the feeling that they have once again been betrayed by the social media behemoth.

Wasn’t it just two years ago that Facebook attracted publishers with the promise of faster loading Instant Articles, which were supposed to speed page loads for mobile devices? However, last year it told publishers it was going to prioritize video, and that great sucking sound you heard in the industry was from writers and print content creators going down the drain as every site pivoted to video. Well, as we’ve already written, the pivot to video was of little interest to site visitors, because they care a lot more about content than about format.

Facebook has now suggested that publishers NOT pivot to video, because they’ve found the monetization opportunities are not there. Again, we’ve already written about sites like Buzzfeed or Mic, who actually did pivot to video and are now facing the consequences of lost visitors and low ad revenues.

For the past couple of years, mass market sites have been at the mercy of Facebook’s experimentation. And of course Facebook is constantly experimenting, and is far more resource-rich than any of the publishers. Now that Mark Zuckerberg is in trouble over fake news, he’s much less willing to experiment with Facebook as a source of news. Our guess is that the last election gave him a crash course in the down side of being a media company, and now he’s going to crawl back into his corner and focus on connection individuals.

That doesn’t mean Facebook has become useless for advertisers, of course. It’s the publishers who will bear the brunt of this whiplash. Once again they will have to redesign their sites and give some thought to what might draw and audience to their own sites. That’s called audience development, and it was a mistake to put it in the hands of Facebook in the first place.

Oh, and if you were one of the few Facebook members who used M, its concierge messaging service, that experiment is also over.

The company is shutting down M’s services without even letting it leave the testing phase, where it had operated since 2015. The service once seemed to hold the promise of acting as a digital concierge, helping people book hotels, order food, keep their schedules and perform other tasks.

M’s technology, which was something Facebook used to learn about AI, will still be in the background in Messenger, which Facebook believes will continue to be a platform to develop chatbots for sales and customer service.

Facebook’s Problems Illuminate Dangers of Scale

As if all the new blockchain companies trying to fix digital ad transactions weren’t enough, we will certainly face more scrutiny in the buying and selling of ads since it was revealed that a Russian troll bank connected to the Kremlin propaganda machine bought $100,000 worth of ads on Facebook during the last election. This was admitted by Facebook, which probably means it’s the tip of the iceberg. Underneath is an iceberg that could harm Facebook if the election revelations are looked at as part of  a pattern that includes Facebook’s recent gaffe with data reporting.

That gaffe, reported by CNBC,  was discovered by a Pivotal analyst,

Facebook’s Ads Manager claims a potential reach of 41 million 18- to 24-year olds and 60 million 25- to 34-year olds in the United States, whereas U.S. census data shows that last year there were a total of 31 million people between the ages of 18 and 24, and 45 million in the 25-34 age group, the analyst said.

“While Facebook’s measurement issues won’t necessarily deter advertisers from spending money with Facebook, they will help traditional TV sellers justify existing budget shares and could restrain Facebook’s growth in video ad sales on the margins,” said research analyst Brian Wieser, who maintains a “sell” rating on the stock with a price target of $140 for year-end 2017.

While the incorrect reporting of data is something Facebook itself has to fix, the propaganda problem is more difficult to address.

There is a lot of hand-wringing going on in our government and in our newspapers wondering how the Russian ad buy could have happened. But we in the industry know exactly how it could happen: Facebook Ads Manager. Anyone with a credit card  and a Facebook account can use Ads Manager, and several people making relatively unnoticeable buys of about $10,000 each could easily have the benefit of Facebook’s super-targeting abilities to hit very specific people with very appropriate messages that would resonate enough to cause them to change their behavior patterns or — we wonder — their votes.

Thus, the same specificity that brands love can be perverted by political organizations to manipulate minds.

How should we think about this?

In Europe, the GDPR addresses some, but not all of this by giving consumers more control over their data. However, we haven’t yet seen any expert analysis of how this would apply to Facebook, which is not a conventional publisher. In fact, Facebook has been reluctant to think of itself as a media company at all. In the face of these recent discoveries, that’s one thing we think will have to change. We may see the return of the ugly word “platisher” as we in the industry try to address these concerns.

 

Will Facebook Groups Hurt Publishers?

Publishers who have struggled to maintain revenues for years against the onslaught of Facebook’s command of the audience  now must face another example of how little the site truly cares about its publisher partners..

We have been saying for a long time that there something wrong with Facebook’s measurements in the light of our own experience. And now the advent of third-party metrics has revealed that some of Facebook’s video ads have as little as 20% viewability, which is only one aspect of the measurement corrections the site has had to make over the past six months.. That’s not  likely to change very soon, because Facebook does not prioritize publishers and never has. Nor, it seems does it prioritize brands, even though they pay the bills..

But Facebook has bigger problems than either publishers or brands. Now that the world has recognized it as a media company,  it has governments coming after it and users accusing it of spreading  fake news. It’s at once a publisher and a platform for publishers.  Like Google, whose motto may be “don’t be evil,” but who has recently been fined by the EU for another kind of evil,  Facebook has gotten too large to be seen favorably by everyone, and its management has to juggle a multitude of conflicting priorities.

To address what it believes is the biggest of those priorities, keeping users engaged and on the platform as much as possible, Facebook has rolled out a new strategy around groups. It is no longer enough in Mark Zuckerberg’s  eyes that the world be merely connected to friends and family, it must also be brought closer together. Taking his cue from some very large groups that formed around interests such as specific diseases or leisure activities, Zuckerberg first began  to talk about the value of groups.

Then in June Facebook held its first community summit and announced a change of mission. From USA Today

After a decade of promoting Facebook as a service that connects small groups of friends and family, Facebook is broadening its focus for the next decade to “give people the power to build community and bring the world closer together.”

The new mandate stems from Zuckerberg’s soul searching on how Facebook should evolve to help people pull together in divisive times.

Facebook was supposed to give people a sense of common humanity. Instead critics say Facebook has played a role in increasing polarization with the spread of fake news and reinforcement of filter bubbles during contentious elections in the U.S. and overseas.

This seems to further distance Facebook from its publisher partners as it seeks its own continued growth.  It also begs the question of how advertising will be served to users in groups. Making money has always been a necessary evil for Facebook, which has the attention in an economy based on attention.

Facebook, like any other company, has its own survival imperatives. Most premium publishers we know have already dedicated more resources to Instant Articles than they are getting back in revenue, and some already pulled back.

We would advise publishers to focus on their own audiences with quality content that is highly targeted and served on a well designed site that loads quickly. Depending on Facebook for driving traffic or increasing revenue is, as always, naive.

 

 

 

 

 

 

 

Facebook Offers Publishers Another Chance at a Haircut

One thing is for sure: Facebook’s domination of both audience and of digital advertising spend has caused one set of problems after the other for publishers. Essentially Facebook, which does not like to identify itself as a media company, is trying to find ways for visitors to stay in its app rather than clicking through to a publisher site. This has frightened publishers, for obvious reasons. In fact, it has frightened them so much that they have begun to see Facebook as a true competitor rather than just a distribution channel. Every time Facebook makes a change, which is often, publishers stand to lose more advertising dollars.

To this end, many premium publishers have already gone to a subscription model to increase revenue. The New York Times allows ten free articles a month. The Economist allows three free articles a week, and the Wall Street Journal has a hard paywall. This in addition to advertising.

Now Facebook has jumped on that bandwagon as well. Facebook is going to allow people to subscribe to publications through its app. The feature will roll out by year’s end.

Although publishers have asked for this since the advent of Instant Articles, the details of how it will work and how publishers will be paid are not clear:

There are a lot of details to be worked out, including what the model would look like, what subscriber data publishers would get and how the revenue would be distributed. Facebook has moved toward a metered model, and while nothing is final, the latest proposal involves a metered model where users could read up to 10 articles for free a month before being required to subscribe. Publishers would be able to decide if each article is subject to that meter, free or behind a hard paywall, according to people familiar with the discussions.

There’s another big question: how will readers subscribe? If it’s through Instant Articles, Facebook will have to convince publishers who have already bailed on it. The move comes after many publishers, seeing no value from Instant Articles, moved toward Google’s Amp pages. The New York Times bailed early in the year, and even smaller publishers do not push all their content through IA.

Of course subscriptions could be sold through the App Store and the Google Play store, although Apple takes a 30% cut of whatever is sold through its store. And you’d expect Facebook to want a cut as well, so…

One thing is certain. Publishers who aren’t on the ball and using every technique at their disposal to maximize revenue will once again take some sort of haircut. And they’ll be spending the summer figuring out how short that haircut will be.

Facebook’s Day in the Sun May be Over

For publishers, Facebook is no longer the darling it once was.  To be honest, it was never a darling; it was more like a force that had to be reckoned with, as all the publishers who jumped on Instant Articles thought they knew. For them, once Instant Articles launched, it was damned if you do and damned if you don’t. Now, with display advertising largely being replaced by video, Instant Articles isn’t worth the loss of control over their own sites.

The Times is among an elite group of publishers that’s regularly tapped by Facebook to launch new products, and as such, it was one of the first batch of publishers to pilot Instant. But it stopped using Instant Articles after a test last fall that found that links back to the Times’ own site monetized better than Instant Articles, said Kinsey Wilson, evp of product and technology at the Times. People were also more likely to subscribe to the Times if they came directly to the site rather than through Facebook, he said. Thus, for the Times, IA simply isn’t worth it. Even a Facebook-dependent publisher like LittleThings, which depends on Facebook for 80 percent of its visitors, is only pushing 20 percent of its content to IA.

But what’s happening with video? Sites like Bloomberg are launching tech demo offerings that publish video to Facebook live. But like everything else Facebook, Facebook Live arrived with the promise that it would solve monetization problems, but no one knows for sure (yet) how well it works.

Mark Gurman, the expert from 9-5 Mac who got hired away by Bloomberg because he had so many contacts at Apple who fed him rumors, has just started a gadget show that will stream live on FB live. This follows the successful sale of the Wirecutter to the New York Times, and the launch of Circuit Breaker by The Verge. Apparently everyone thinks unboxings, demos, and reviews of gadgets will be the best way to monetize video on Facebook.

We don’t think so. One of the problems with Facebook is that no one goes there to buy things, or even to look at branded content. Rather, they go to connect with other human beings in Facebook Groups, or to respond to invitations to Facebook events. We think that as time goes on and Facebook’s numbers get audited by third parties, we will all learn that Facebook, although it has such amazing scale, does not produce proportional results.

And all of this may be further complicated by new tools Facebook has just released that allow users to suggest that specific articles and sites might be fake news.

We’re pretty sure that the days of sheer scale are numbered, and advertising will go back to more sensible goals — reaching the right potential buyers.

 

 

 

 

Are we at Peak Facebook? (Part 1)

Last spring we wrote about Facebook’s plans to develop Messenger into a platform on which it will sell ads. This naturally raises questions about the future for other publishers.  Not to be too much of a Pollyanna about this, we think “this too shall pass.”

Why? Because Facebook exists in a moment in time, just like any other medium. As of now, it appears to have aggregated not only the content of 1.5 billion global individual users, but that of many of the major publishers through its Instant Articles initiative. According to received economic theory, this places all the profits in the hands of the aggregator.

However, look back a scant fifty years ago, and people thought the same about newspapers. All the “news that’s fit to print” was aggregated in the newspaper, so that’s where the ads went, and  with them the profits.

We believe Facebook faces two problems going forward — problems that should give niche publishers some hope.

First, Facebook ads are truly useful in only a small percentage of cases. For performance advertising, it does not work well at all. Advertisers can spend large amounts of money accumulating “likes” without have those convert into sales. Yet Facebook ads, because of their reach, are becoming more expensive. They’re no longer an experiment; they require just the right kind of integrated, cross-channel campaign.

And for business to business, Facebook doesn’t work at all. It’s a platform that begins and ends as a consumer brand and intends to remain that way.

Second, advertising on Facebook is by nature interruptive. When people come to Facebook, they aren’t coming to shop; that’s for Amazon and EBay. They’re coming to catch up with their friends. That makes it very simple for a brand to alienate their customers by reaching out to them at inopportune times, which is why companies like Everlane plan only to use Messenger for customer service. We do not seek advertising on  Facebook, and it is very difficult to make Facebook ads contextual. In the kind of data-driven environment we live in now, where ROI can be measured, small publishers with niche markets will perform better.

And here’s a bonus reason not to go “all in” on Facebook: it is already ten years old. The speed with which technology and consumer tastes change nowadays means we are probably at Peak Facebook, and the next latest and greatest thing, perhaps Medium, perhaps Snapchat, — who really knows? — may gradually siphon off the Facebook audience in the way Facebook has siphoned off audience from Yahoo.

It’s best not to put all your eggs in one basket.

Facebook Metrics Show Danger of Buying in Walled Gardens

Nothing says more about the danger of buying only from walled gardens than Facebook’s recent admission that people were not watching as much video on the social network as it had  reported. The average video on Facebook was counted as “viewed” after as little as three seconds, but Facebook didn’t calculate in the number of people who don’t watch video on the site at all.

Facebook apparently made a division error of the kind any normal human could make,

Instead of dividing the total time spent watching a video by the total number of people who watched that video, Facebook’s metric reflected the total time spent watching divided by the number of views the video had generated. With Facebook counting views at three seconds, that meant anyone who had seen just a glimpse of the video was not getting represented in the metric. In fact, Facebook told advertisers that its metric was off by 60 to 80 percent, according to The [Wall Street] Journal.

Advertisers seemed not to care, revealing they they don’t buy on time watched, but on either 10-second views or completed views. In this case. Facebook’s being wrong didn’t seem to cost advertisers money. But they should care, because it turns out 80% of Facebook users don’t watch video at all. Brands looking to shift large budgets from TV to digital video can’t do that safely until the know what their return on investment will be similar. It would be more advantageous if buyers spent more with independent publishers, who are closer to their audiences. Facebook’s audience is simply too large to count properly, and too uncommitted to give good results.

Most independent publishers are forced to accept some kind of third party verification of their views, but Facebook does not use third party vendors; it does its own analytics internally. After this admission, self-attestation will not work anymore for Facebook. It must allow in the same third party vendors, ComScore, Nielsen, or someone else, that the rest of the publishing world uses to tell its story.

For publishers, this inflation of the video watching time is worrisome at best, because most publishers felt they had to pay ball with Facebook and when the platform put its emphasis on video, publishers scrambled to provide video content. But all these publisher resources would be wasted if no one were watching. Because of the way advertisers pay, they can afford to wait and see if their ads work. Content publishers have no such luxury. Once they throw money at an expensive initiative like video, they would like to be sure they’re getting paid.

It will be a while until all this sorts itself out, and we figure out whether mobile video deserves the dollars being pulled out of trusty old TV.

 

Facebook’s FAN Will Serve Ads to Non-Users

Once again, Facebook has signaled its power in the ad tech business. After sunsetting Live Rail and its ad exchange, the social network-cum-media company has now gone all in on the Facebook Audience Network, designed to reach people who do not have Facebook accounts but look like similar audiences that do.

On the face of it, this is a good idea. But we wonder if it’s really as good as Facebook expects. There is actually a question on Quora, the well-regarded question and answer site, that gives us insight into what kinds of people don’t have Facebook accounts.

The foremost reason, which has had almost 2 million views, is that Facebook is a time suck. The second reason, not unexpected, is a concern for privacy and having one’s information out all over the internet. And the third reason is reject a Facebook account is lack of regular internet access.

Given these three reasons, we wonder whether this kind of targeting, as described by Adam Bosworth, Facebook’s VP of ads and business platforms, “the company hopes to use its interest-based data to target ads to lookalike audiences who don’t have Facebook accounts. It also hopes to use its “like” button to serve ads based on the content that engages people. ”

Bosworth admits that he doesn’t yet know how well this expansion of the total addressable market will work for Facebook, so the company is going to roll it out slowly. He feels he has the right tools to evaluate  whether he is adding value for publishers. But how will he test the impact on non-users of ads they didn’t expect? And how will he prevent fraud, once the ads get out into a broader market?

When companies are as large and powerful as Facebook is, they tend to think they have the engineering resources to deal with these questions. Our take on it is that Facebook is trying to get younger users, who seem to favor Snapchat, involved in Facebook’s ad network. This, however, is somewhat dangerous, because people under 13 do participate in Snapchat, while Facebook does not allow them to open accounts.

We are already beginning to recognize that Facebook is much more than a social network. Recently, because of the flap about liberal v. conservative views, we began to see Facebook as a media company. And now, if the FAN network succeeds, we may also have to think of it as an ad server.

What does Google think?

 

 

Video Takes Over the Internet

The week of Christmas, while everyone was partying, Facebook released a slew of new features designed to make it the largest hosting platform in the world for video.  Facebook has been catching up to YouTube for a while, but the new features, which include a “Click for more” offering on the desktop, and live streaming by brands from their brand pages, should both drive more revenue and avoid making users furious at brands live streaming in their news feeds.

Here’s how the new features work, according to Digital Media Insider:

‘Click for More’ on desktop:

  • Facebook is testing a call-to-action button for its desktop users. Clicking anywhere on the video will take users to another window, which will show a larger version of the video as a part of a carousel of related videos.
  • Ads will be intermittently shown between videos, which will autoplay unless users select otherwise.
  • By taking users to a separate window, Facebook is ensuring that users who engage with the button aren’t distracted by the Newsfeed. This will likely increase the number of videos Facebook’s users view, which will have an effect on the click-through-rates and impression rates of its videos.
  • The feature is likely trying to act as a precursor to Facebook’s upcoming standalone video portal, which is expected to launch in 2016.

Live streaming for brands:

  • Facebook is allowing verified brands on its Pages site to live stream to their pages. Page users tap a “Publish” button and select “Live Video” at which point the video will begin after a brief opportunity for an introduction.
  • Facebook Pages will offer metrics so brands can follow how many viewers are tuned in. For the moment live streaming will only be available on Facebook for iOS.

Earlier this year, Facebook said that they expects video to effectively take over the social network in the next couple of years. Considering the rapid increase in both the number of videos published to the site and the daily views that the site experiences, this is a plausible statement.

What surprises us is the playing of intermittent ads, and the autoplay of video. both of which have been shown by industry group surveys to anger users. However, someone who actually goes to a brand page intending to watch a live stream is probably a far better targeted lead than somebody reading her news feed interrupted by a live stream ad.

Streaming video, permitted (for now) only on verified brand pages, will also give an advantage to advertisers with large enough budgets to warrant being verified, Small businesses on Facebook are still out of luck.