Why would publishers want to jump into bed with their top "frenemy" Facebook? Well, they're not, entirely.
Four of the first U.S. publishers to publish mobile articles directly on Facebook through its new Instant Articles program -- The New York Times, BuzzFeed, National Geographic and NBC News -- plan to handle ad sales themselves and keep all of the revenue, turning down Facebook's offer to sell ads and share the take. Only the fifth, The Atlantic, said Facebook could eventually sell some of the ads in its Instant Articles.
"To have a third party sell [our ads] is not part of the strategy," said Greg Coleman, BuzzFeed's president. "And Facebook wants us to do whatever is best for us."
Facebook and its publishing partners are touting how quickly Instant Articles load within Facebook's app -- as much as 10 times faster. And, they say, it creates a better experience for readers. It also ensures users spend even more time in the Facebook ecosystem.
But that clouds a much larger narrative: Instant Articles are a way for publishers to get a piece of all the mobile ad money Facebook has been making, $2.42 billion in the first quarter alone, and largely keeping to itself.
Advertisers are expected to spend $50 billion on mobile ads by 2017 in the U.S., according to research firm eMarketer. That will be double the amount spent on desktop ads. All of that money needs to go somewhere. Right now it's not flowing towards the companies that actually make the content people are reading on their mobile devices. Instead, Facebook and Google have emerged as the big winners.
Now, however, Facebook is saying it will let publishers have some of that money if they agree to publish their content directly on the social network. Load time and brand experience might be a factor in all of this, but really, it boils down to ad dollars.
Publishers that sell their own ads within Instant Articles keep 100% of the revenue. Publishers can outsource ad sales to Facebook, in which case the social network will likely take a 30% cut of the revenue. That's roughly in line with the percentage of ad sales that Snapchat takes from publishers participating in its Discover program.
A lingering question is just how lucrative these ads will be. Publishers could use the Instant Articles format to pitch the accompanying ads at a higher price. But advertisers will likely want to see how many people engage with the Instant Articles-formatted posts before putting more money on the table.
"There's certainly a lot of interest among marketers and there might well be [a premium]," said Declan Moore, chief media officer at the National Geographic Society.
The ads Facebook sells will be sourced from its mobile ad network Facebook Audience Network. Advertisers cannot buy ads on the mobile ad network without also buying ads on Facebook as part of the same package, and a Facebook spokesman said advertisers will not be able to buy ads through Facebook that are targeted to run only within Instant Articles. That means Instant Articles publishers should expect the Facebook-sold ads to run around the same prices that Facebook's normal ads fetch.
For a Facebook mobile ad running in the U.S., advertisers pay an average of 28 cents per click or $4.50 per thousand impressions, according to Salesforce data from the third quarter of 2014.
The first ads appearing within Instant Articles looked like your average boxy banners. The Times, for instance, ran a display ad for Shell, which a spokeswoman for the paper described as its "launch sponsor" on Instant Articles. Even BuzzFeed, which makes nearly all its money from selling, producing and distributing sponsored content for brands, ran a display ad at the bottom of its first story in Instant Articles. The ad linked readers to a sponsored post on BuzzFeed's site.
Branded content finds a new home
But instead of using the Instant Articles inventory to push standard ads, publishers may be able use it to distribute the content they create for brands. Advertisers may jump at the opportunity to promote their content organically on Facebook and side-step the news feed algorithm's bias against brands' organic posts.
Asked whether publishers are allowed to swap branded content in place of editorial content in their Instant Articles, a Facebook spokesman said in an email that the company is "talking to publishers to learn about their business models and explore how we can make them work in Instant Articles." But it's already part of the roadmap for BuzzFeed.
"Branded content will render natively," Mr. Coleman said, declining to elaborate on when that will happen. "We're going to be easing into the market and making sure everything will be running smoothly," he added. "We're working with Facebook on that and working with marketers."
The Times declined to say whether it plans to include its native ad product, Paid Posts, in Instant Articles. "As the experiment grows, there will be opportunities to include more advertisers," the Times spokeswoman said.
A spokeswoman for The Atlantic, which also produces and runs sponsored articles for brands, said, "We're thinking about it and talking about how to do it with Facebook." The Atlantic has already sold its first display ad in Instant Articles, to data-storage company Seagate.
Whether the articles are produced by a newsroom or on behalf of brands, how Facebook's news feed algorithm treats Instant Articles could be more important than their ability to load quickly on mobile. "Nobody has said anything to the effect of the [news feed] algorithm being friendlier to these formats than to other formats," said MEC's head of social for North America Noah Mallin, based on conversations he's had with Facebook and Instant Articles publishers leading up to Wednesday's roll-out. "But if you look at how the algorithm treats publishers already, it's friendlier and friendlier than it is to brands."
It's possible Facebook didn't have to actively do anything to its algorithm for Instant Articles to benefit, as has been the case with Facebook-native videos. If future Instant Articles are as long and full of video as the initial batch, then people would likely spend more time on those pages, a signal the algorithm already uses to find posts worth elevating.
A Facebook spokeswoman said Instant Articles are ranked according to the same criteria as other mobile articles, which includes how much time people spend reading them. Page-load speed is not a ranking factor.
If Facebook's news feed algorithm does help Instant Articles, then that may spur more interest among advertisers who have a hard time getting in front of Facebook's audience without running Facebook ads that are getting more expensive with each quarter.