What Publishers Can Learn from the Rise and Fall of Social Gaming on Facebook
Ever since Facebook introduced its Instant Articles feature last year, publishers have been wondering how the move would play out.
The lure is clear: Facebook provides exposure and traffic despite the fact that Instant Articles do not link to the publishers' sites. For Facebook, A-list content helps keep its news feed fresh, which increases time on site (or app), and the ad dollars that follow.
But under all the veneer, Facebook is quietly creating unfair power dynamics where publishers are set up to lose in the long term. Just yesterday, the company said it would further elevate friends' posts, likely to the detriment of the publishers that have invested so much in Facebook for their distribution.
What we are witnessing here is a repeat of what happened with social gaming, where Facebook's unmerciful adjustments ultimately ended up serving only Facebook and wreaked havoc on a once fast-growing industry.
So publishers, beware. By understanding this history, publishers can avoid repeating the same doomed destination.
Facebook's bait-and-switch on social gaming
Remember FarmVille? Back in 2010, the game had 80 million users -- roughly twice the population of California. FarmVille's owner, Zynga, achieved that feat by piggybacking on Facebook's growth and taking advantage of free and cheap traffic. For a while, this was a good deal for Zynga and Facebook.
At the onset, social gaming companies (of which there were several) helped increase time on site for Facebook, boost engagement metrics and jumpstart Facebook's revenue.
But cheap traffic on Facebook never stayed cheap.
Eventually, Facebook started to charge for game ads and in the interest of quality, turned down the amount of game content that appeared in the feed.
This is the pattern that Facebook repeats: Offer free traffic to get all parties onto the platform, dial down the free model, then start charging for very low prices. For the social game companies, the cheap traffic kept them happy and committed but inevitably by Facebook's hands, cheap surged to expensive.
At the same time, Facebook found a way to take a cut of social gaming's revenue. This squeeze from both sides continued until Facebook determined that something else was a priority (say, live video). Suddenly, expensive traffic turned into almost no traffic.
To keep publishers happy, Facebook appointed a point person to listen to game companies' concerns but never made any changes. The one exception was a special deal it cut with Zynga, which made the playing field unfair for all other game companies not named Zynga. Facebook was willing to cut special deals but in the end, did what's best for Facebook.
Social gaming's combined mistakes of overreliance on Facebook's platform and not investing in building direct relationships with the end consumer sealed its fate.
Learn from the past to prevent future overreliance on Facebook
Publishers should take a lesson or two from the rise and fall of social gaming on Facebook. To date, publishers have freely handed their content to Facebook's news feed in return for a massive audience and scale. Sound familiar?
Left unchecked, it will only be a matter of time before Facebook also chokes publishers' business viability by recycling the same traffic tactics it used with social gamers: increase dependence on the platform, make traffic more expensive, repeat. We're already starting to see red flags.
To avoid going down the same path, publishers need to come to terms with Facebook's real strategic intentions now, anticipate Facebook's next moves, and resolve to develop alternative strategies.
For instance, Facebook has felt free to help shape publishers' content. In late 2013, Facebook de-emphasized viral content in its news feed. That prompted a purge of sites like Upworthy, ViralNova, Distractify and Elite Daily.
Savvy publishers who suffered in that purge have realized that they can use video to get back in Facebook's good graces. Upworthy, which saw its traffic fall in late 2013, has rebounded. Upworthy claimed 167 million video views in December 2015, up from 5 million in January that year. That's great, but what happens when Facebook decides that it's getting enough video from publishers and wants to deprioritize viral video content?
For publishers, there are few alternatives. One is to actively support alternative platforms like Snapchat to help provide some balance in the market.
The other is to gain greater scale by combining resources. That's what a group of German publishers including Alex Springer and Gruhner + Jahr, recently did. The publishers pooled their data to create highly targeted audience segments for advertisers. U.S. newspaper publishers Gannett, McClatchy, Hearst and Tribune Publishing have also joined forces. These latter publishers are taking actions to have greater control over their destinies and not rely solely on platforms.
To avoid repeating social gaming's ill-fated journey, publishers must come to terms now with the fact that perhaps they should be putting as much energy into cooperating with each other as they are into cooperating with Facebook.