Reuters Institute Digital News Report 2018

Transcription

1 May 2018 June Reuters Institute Digital News Report 2018 Not Such Great News for Ad Revenue Leakage 22nd June 2018

2 TOC 3. Introduction 17. Ad spend leaking away 4. Facebook referrals waning 19. Alternative revenue streams 10. What this means for ad revenue 22. Becoming a destination again 2

3 Introduction A couple of weeks ago, the Reuters Institute published its digital news report for There's some great stats in there for publishers looking for signs of Facebook's waning influence on people's news content consumption. But overall, when compared against the social media giant's current commercial performance, the picture is bleak for the future strength of the publisher-advertiser relationship. The following slides look at why this is the case and what action can be taken to improve publisher revenues. 3 3

4 Facebook Traffic Referrals Waning Some good news? 4

5 First, the good news. Facebook is a less dominant source of traffic acquisition/referrals to news publishers. (Source, Reuters): 5

6 Reuters pins the trend on Facebook's tweaks to its news feed and public mood around the Cambridge Says Reuters: Analytica scandal and 'Fake News' (a subject that it It is worth noting that average Facebook dissects deeper into the report). use for any purpose has remained broadly Here in the EU, we might also attribute the fall to public static since 2015, while its use for news awareness of GDPR and a greater general awareness has declined. This suggests either a fall in of personal privacy issues. general engagement or a reduction in exposure to news by the Facebook algorithm, as the company prioritises interactions with family and friends and tries to limit the impact of fake news. 6

7 At the same time, 65% of online news consumers get their content via the 'back door' - as illustrated by the Reuters chart to the right. The stats for search, social and aggregators are key (24%, 23% and 6% respectively - totalling 53%), as these are channels where the 'news customer journey' is not owned by publishers. (And where, broadly speaking, primary customer data and ad revenue does not flow directly to publishers.) 7

8 Alongside the Facebook data, the report digs into referral/acquisition data from other social media apps and services. Here, we see the picture in reverse. Traffic from non-facebook social media sources is rising. 8

9 Says Reuters: At the same time we have seen a rise in the usage of alternative platforms such as WhatsApp, Instagram, and Snapchat. Average news usage for Facebook has fallen from 42% in 2016 to 36% today while other networks are stable or have been growing rapidly. 9

10 What Does this Mean For Ad Revenue? Same outcome, different channels... 10

11 Elsewhere, we know from Facebook's 2018 first quarter earnings report that the trend for news referrals may be a general one. For instance, in the US and Canada it saw a 700,000 drop in monthly active users. However, global monthly users continue to grow strongly (see Statista chart below), and ad impressions rose by 8% year on year. 11

12 Heading back to the Reuter's narrative around social media activity, aside from Facebook we can also see huge jumps in monthly average users on Instagram (a Facebook-owned, ad-serving app): 12

13 Looking at the ad revenue picture for Facebook, Q demonstrates strong year-on-year growth at $11.97 billion - a 50% rise on Q Q1 is historically the lowest revenue quarter, with strong growth to follow for rest of year - suggesting good things to come for Facebook in

14 The previous chart bundles together all of Facebook's ad revenue. The chart below splits out Instagram-only revenue for the past x4 years (with a prediction for the year to come) is set to be a good year for Instagram in terms of contribution to Facebook's fortunes. 14

15 Other notable stats from Facebook's 2018 Q1 earnings release include: Daily active users (DAUs) DAUs were 1.45 billion on average for March 2018, an increase of 13% year-over-year Monthly active users (MAUs) MAUs were 2.20 billion as of March 31, 2018, an increase of 13% year-over-year Mobile advertising revenue represented approximately 91% of advertising revenue for the first quarter of 2018, up from approximately 85% of advertising revenue in the first quarter of

16 For context, here's a nice comment from Forbes: Facebook can capture a bigger chunk of online ad market. While Facebook has over 6 million advertisers, the advertiser count on Instagram has grown to over 2 million. Furthermore, 98 of the top 100 advertisers on Facebook s main website also advertised on Instagram. Considering that mobile ads will make up a majority of the online ad market going forward, we believe that Facebook is well-positioned to capture a bigger share as its platform can capture user s mindshare across both PC and mobile. 16

17 Ad Spend Continues to Leak Away Guess where? 17

18 So, whilst it seems that Facebook is driving a little less traffic to news publisher services, the devil is in the details. At the same time, the use of other social channels for news consumption is rising fast, The bottom line: Whoever owns the customer journey, owns the attention and the ad spend. especially Instagram (and Facebook Facebook continues to dominate in these Messenger), and global ad spend continues terms, with a global average of 40 mins per to follow in this direction. day spent on their newsfeed. (Sidenote: will WhatsApp carry ads soon? Until publishers do something to claw back Some people seem to think so.) some of that attention span, ad spend will continue to leak away. 18

19 Alternative Revenue Streams Paying for news... 19

20 Heading back to the Reuters report, there is better news to be found in news consumer attitudes to paying for their content. Two thirds of respondents (68%) are either unaware of the problems of the news industry or believe that most news organisations are making a profit from digital news. Those that were aware that digital newspapers are making a loss (10% of our sample) are more likely to pay for a news subscription or give a donation. 20

21 The Guardian UK is one of the case studies that Reuters highlights here. The report states that it has......received 600,000 voluntary payments, raising tens of millions of pounds each year. Further, those who are donating tend to come from the core social media demographic - people under the age of

22 It s Time to be a Destination Again 22

23 These payment stats are reasons to be cheerful. If We believe that audiences can be developed more we assume that the upward paid / donate trend is strongly - and publisher services can become more linked to a growing distrust of content found on of a destination for the initial act of news gathering - social media, then surely there is more work to be if there is a greater investment in delivering better done (and revenue to be found) here. user experiences and smarter applications of content. What publishers need to focus on is changes to their editorial strategy (and measurement) and the user Why? experiences that they generate. Because content is the currency of news. Obvious as Felix's aim is to help publishers everywhere in this that may seem, there is a fault line in the current MO respect. of the publishing industry: content is also the currency of social media. 23

24 We say: When publishers become over-reliant on social content distribution to generate traffic, they diminish the importance of their brand whilst strengthening the position of social networks. 24

25 In short, the Groundhog Day-like strategy of publishing for Every day the beast is being fed, and every day another page views - over and above the desire to convert that fistful of ad revenue moves to social media. traffic to more meaningful commercial outcomes such as consumption of further content, greater dwell time and deeper levels of engagement in publisher services, is something like the road to hell. It's time to break that loop and become a destination again... 25

26 Get in touch to see how our Ai-driven engine can tackle these challenges