Technology is our friend: My take on Google's new publisher initiative
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May 8, 2015

My take on Google's new publisher initiative

Last week, Google announced a new activity called the "Digital News Initiative". The key headlines were that a fund of 150 million Euros was set up to support product development, foster innovation and conduct training and research. Why would someone spend 150 million Euros - even for Google a considerable amount of money - to fund innovation that, let's be honest, could probably be invested more effectively in their own resources?


http://www.digitalnewsinitiative.com/

Most newspapers, including founding members Guardian, FAZ and Zeit, went along the lines that with that new initiative, Google would admit mistakes and put the whole initiative in the context of the EU's investigation of Google's search results as well as the ongoing arguments about the "snippets" that Google would use for their own services. All this might have played a role. but I think most of the papers missed one central point - maybe because they are involved in this story themselves, regarding that a few days after the announcement, also Spiegel, Süddeutsche, Bauer Medien Group, NZZ and others joined the initiative. That central point that was missed is: Facebook. Google needs publishers more than ever, as social media, first and foremost Facebook, gets more and more of their resources and more and more importance in their business models.

Why is that? I see 5 major points (there are probably more):

1. Facebook as a traffic source

We all know that Facebook sends a significant part of traffic to websites. Buzzfeed is an extreme example, getting more than 5 times more traffic from social than from search, and I tried to explain the mechanics and impact of all this in an older post, but there are only a few publishers left (to my knowledge) that get less than 10% of their traffic from Facebook, and I often hear numbers upwards of 20%. The 3 year graph from Shareaholic shows beautifully how social as a traffic source is gaining importance, and how Facebook is driving this whole development with approx. 25% share on overall traffic on average:

https://blog.shareaholic.com/social-media-traffic-trends-01-2015/
This does not mean that Google is not relevant - but it is becoming less important than it was, and that's something they can't be amused about. Additionally, and I wouldn't underestimate this: SEO, to many managers, is still a "dark witchcraft" and Google News is seen as a business model that hijacks content businesses, while driving traffic from Facebook is, although dependent on the newsfeed algorithm, something that can better be influenced by own managerial decisions and behaviours. At least this is the perception, and it has an influence on where companies put their resources.

2. Facebook accelerates mobile

Facebook's mobile numbers are stunning (get the full slideset here). From 1,44bn monthly active users (MAU), almost unbelievable 86,6% also used mobile. But here comes the real number: 40,32% of the entire FB userbase in MAU were mobile exclusive in Q1 2015 - and growing:

http://files.shareholder.com/downloads/AMDA-NJ5DZ/153070542x0x822961/FD718A09-C312-4605-9A17-1D6EF07BDD5A/FB_Q115EarningsSlides.pdf
So the referral traffic from Facebook leads to mobile article sites, with the share of homepage traffic declining and less advertising abilities and, at least in Germany, in most cases lower CPM prices for display. But a) that's user behaviour, and hoping they would use Google to search instead of waiting for their newsfeed to serve them interesting stories is not a strategy, and b) with traffic shifting into apps, and Facebook being able to deeplink into apps, this way of generating traffic gets strategically important.

3. Facebook accelerates video

Display is a business that publishers understood deeply. Video not so much, or at least there is room for growth. As most publishers do not use the YouTube player but their own, in order to get more out of their preroll video ads and stay in the driver's seat at least for ad sales, many publishers do not use YT as a place to distribute short form and teasers in order to position themselves as a video provider. With 4bn video plays a day (although the numbers are flawed, FB has an autoplay feature and counts 3 seconds as a play), Facebook is a place where publishers can reach their audiences with moving images.

4. Facebook helps with insights

I used the term "their audience" in the last sentence. It is astonishing to see how little publishers know about their audiences, their behaviours, their interests, and how few possibilities they have to reach out to them. Facebook provides all this, and if you were to choose a login service regardless of a potentially dangerous dependence, Facebook's login provides way more valuable data and options to communicate on than Google's. And they are leading there, too:



5. Facebook helps to monetize

atlas by Facebook may finally play out the "coopetition" scenario in which publishers and Facebook will clearly be, but to some it will be a great source of revenue. And even without looking into the future: Facebook "instant articles" lets publishers show full stories in the newsfeed - and keep the revenue or at least a big part of it (for now). This is a complicated strategic challenge for every publisher, but if you look at the bottom line for the upcoming quarters only, and many do, it's an offer that - at least - needs to be explored and thoroughly considered.

To summarize, I am not saying that Google became irrelevant to publishers, and I am especially not saying that they should concentrate on Facebook alone. I also do not think that Facebook is the one and only reason for Google's 150 million spend over three years to publishers. But I wondered about how few people in their assessment of this "Digital News Initiative" considered these 5 major threats to Google's business. Strengthening relations to publishers and enabling them to do a better job online, without having to rely on services that will potentially come from Facebook, will have been one thought among others why such an initiative could be a good idea. For publishers the time has come that if you do not have a clear vision and strategy, you will struggle to take advantage of the Mayweather-Pacquiao style showdown that we can expect between the two.