The digital addiction killing publishers

To achieve page views, digital publishers have welcomed Google, Facebook and co into their pages. Now their precision advertising advantage has been usurped.

Generally, media companies have been valued by advertisers for two reasons. One, they provided access to audiences of value via advertising space which could be purchased. Secondly, they acted as a trusted advisor providing insight and knowledge around their audience, their habits and their preferences.

For many, the trusted advisor component was far more valuable than the advertising component – as it provided information that allowed advertisers to better understand their target market.

Iconic media brands were built around this premise both locally and internationally – Forbes, GQ, Vogue, Elle, Time, NY Times, The Guardian, The Economist – these provided advertisers with a window into an audience that they valued. And they did it for decades – building up valuable businesses and brands. They were considered as custodians of the audience.

However, this is not the case any more. Not at all.

What changed? The internet combined with the expansion of pay TV introduced a barrage of competition in these previously lucrative areas. More choice translated to more competition for advertising dollars. Digital’s reliance on quantitative metrics meant growth and page views became the key goal – which in turn led to traffic by any means required.

The two largest providers of traffic for most websites are Facebook and Google. Generally, more traffic will come through either of these two channels that comes in via the ‘front door’. The user's interest is in the subject – not the media brand – and once they have read the story or viewed the content they generally depart. For these users they are loyal to brand Google – Google is the trusted advisor.

In recent years Facebook has become a huge provider of traffic for internet sites. So much so that it is changing how many brands publish content. Page views equate to more ad impressions, and the general logic is more ad impressions equal higher revenue. So now the overwhelming majority of sites will carry ‘share this’ buttons in easy view, hoping that a reader will deem an article worth sharing. The most common share buttons are for Facebook, Twitter and Google Plus.

In doing this what the publishers have done is handed over the keys to these three companies. Facebook’s data use policy outlines the following: "We receive data whenever you visit a game, application, or website that uses Facebook platform or visit a site with a Facebook feature.”

Not bad – this allows Facebook to know what articles you’ve read, what areas you like, what time you’re generally looking at specific content, what devices you’re using, the location of people reading certain content, the demographics of people interested in certain areas. And this is for all readers who are logged into Facebook at the time – not just those who ‘like’ the article. So Facebook has information around almost all users of a site, whereas the publisher only has info around those who have completed an action such as sharing or liking.

Add to this all the other info Facebook has – your friendship circle, other interests, recent activities, brand preferences etc – and it is clear they know far more about a publishers audience than the publisher does. It is the same for Google Plus – it is collecting the same data behind the scenes, and when it collates that with search data and information from Gmail scraping – it is building up a powerful information stack on a user.

Publishers were more or less happy with the trade-off – Facebook and Google were great for traffic – they kept the numbers big and big numbers meant the advertisers were happy. Right? Well … sort of. Advertisers were happy, but are they going to remain happy with this approach? Probably not.

Why? Advertisers are aligned only to those companies that can get them as close as possible to their target consumers. Advertisers are only interested in media partners who can add the most value to their business. The issue is the two companies with the most information on users – information with depth never before seen – are Facebook and Google.

Google has an ad network. It’s a pretty good one getting better every day. It has access to a load of inventory and its fuelled by a deep pool of data. It is rapidly stealing share from competing display advertising products in Australia and overseas. It’s value comes from insight and information that has been in a large part gifted to it by its now competitors – information Google collated by being given access to all the data and insight a media brand probably should keep to itself. And for free, too.

There is strong talk Facebook will develop its own ad network in the same style as Google – collating remnant inventory across the internet and adding value through its own layer of data. Data that has again been gifted to it by most internet sites around the world, all desperate for the Facebook share juice which will keep their page view counts high. But again, in doing this it has given Facebook all the valuable information on its users for free. Facebook now can target in a way so precise that the idea of relying on a media brand to reach an audience is becoming increasingly redundant.

And herein lies the problem – publishers have given away the thing advertisers truly value in exchange for something that is becoming more and more meaningless. The perception has always been that online advertisers value page views above and beyond all other metrics. This is not the case. They value data more than anything else first and foremost, and then how that data is applied to improve advertising performance. In chasing short term page view pennies, publishers have given away a vital component of their financial future.

And who gave them the most valuable information and insight to do so? Their digital competitors.

Ben Shepherd is group commercial director at Dainty Consolidated Entertainment and blogs at Talking Digital.

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