How Recent Changes In The Social Media Landscape Further Compromise News Corporations’ Efforts To Monetise Their Social Referral Traffic

This essay will elaborate on recent changes in the social media landscape, specifically changes in social traffic referrals and the persistence of social media, and their subsequent implications for digital business models of newspaper publishers. Taking into consideration that social referral traffic is becoming the main source of referral traffic for many media and news publishers, changes in the persistence of social media have the potential to largely compromise the publisher’s efforts to monetise their web traffic through advertising.

-> tl;dr


A definition of social media

In order to classify changes in the social media landscape it is sensible to define the term for the current state of its development. For the purpose of this essay this can be done without illustrating the historical evolution of aspects, features and characteristics. Since social media have changed drastically over the past years, many attempts of defining the term have been made. Due to the ever-changing landscape and the rapid technological development of social media, many of these definitions seem out of date or imprecise. For the purpose of this essay the definition by Carr and Hayes (2015) will be used, since it provides an accessible explication for the long-term future, considers recent changes in technology, interaction and organisation as well as anticipates future challenges in social media. They define social media as follows:

“Social media are internet-based channels that allow users to opportunistically interact and selectively self-present, either in real-time or asynchronously, with both broad and narrow audiences who derive value from user-generated content and the perception of interaction with others.”

(Carr C T and Hayes R A, 2015)

This definition allows to include a wide variety of services, ranging from obvious social networking sites such as Facebook and Twitter, business networking sites such as LinkedIn, video sharing sites such as Youtube and Vimeo to live streaming services such as Twitter’s Periscope as well as old and new messaging services such as WhatsApp and Snapchat among many others. It also allows for future social media services to be included, as long as they are user-centric and interactive channels organised around content sharing, characteristics that are shared among all social media channels to date.


Changes in social referral traffic

One industry relying heavily on shared social media content is the media and newspaper publishing industry. Newspaper websites are largely monetised through advertising and rely on visits and page impressions on their actual web property (Ju, Jeong and Chyi, 2014). The sources for such website traffic can ruffly be divided among direct traffic (users accessing the website directly by entering the url in the browser) and referral traffic (users accessing the website through search engine results such as in Google or through a link on another web property or within social networks). Every user visiting a publisher’s usually free to use website generates page views while accessing different resources on the web property. With every page load advertising inventory will be displayed for the user to generate advertising revenue for the publisher. In conclusion publishers’ digital business models rely heavily on page views and ad impressions to monetise their inventory.

Over the past years the importance of social referral traffic for media and newspaper websites has changed dramatically. In August 2015 it was reported by FORTUNE that traffic analytics firm Parse.ly’s data showed social media as the largest provider of all website referral traffic with about 43% of the total traffic, while search traffic through Google accounted for just 38% (Figure 1). Facebook is by far the largest provider of social referral traffic in this dataset with close to 40%.

To emphasise the dramatic trajectory of this change, Facebook’s share grew rapidly from just 20% in January 2014 (Figure 2). For larger news and media sites, more than 50% are reported to get more traffic from Facebook than from Google (Ingram, 2015). This development could very well be considered a tipping point for the dominance of Facebook as the main source for news content on the internet.

Figure 1 - Top Traffic Referral Source May - July 2015
Figure 1 – Top Traffic Referral Source May – July 2015

 

Figure 2 - Parse.ly Network Traffic from Google Versus Facebook
Figure 2 – Parse.ly Network Traffic from Google Versus Facebook

With social referral traffic accounting for such a large portion of traffic for major news and media websites, it is clear that the monetisation of this traffic is crucial for the publishers’ business model. Unfortunately for publishers, recent research by Ju, Jeong and Chyi (2014) showed that users accessing news websites via social networking sites provide fewer page views and higher bounce rates than other website visitors. The authors examined 66 U.S. newspapers’ efforts to distribute their content via social networking sites such as Facebook and Twitter and the effectiveness of these services as news platforms. The social media presences of the newspapers were analysed and the impact to the newspaper’s website traffic and therefore their advertising revenues examined.

The results of the efforts to drive social referral traffic have proven to be largely underwhelming, despite the hype about the business potential for newspapers (Ju, Jeong and Chyi, 2014). The research clearly illustrates the limitations of creating new advertising revenue streams through social referral traffic for newspapers. With an increasing number of visitors being referred through social media, the average page impressions per visit are shrinking on publishers’ web properties. This development has direct impact on the publishers’ ability to monetise their web traffic and is consequently accelerating at the same pace as the amount of social media referral traffic is increasing.


Changes in the persistence of social media

An important element of social media has been the persistence of content, may it be used in real-time as in Twitter’s Periscope or asynchronously as in WhatsApp. For many years it has been a crucial aspect that any content within the social media landscape remains persistent (Dewing, 2012), meaning accessible and searchable via the web for ever, even if the users’ practice focuses more on the shared present (Hogan B and Quan- Haase A, 2010).

Although the persistent element is still existent in lots of social media channels, recent services like Snapchat introduced channels which delete content shortly after consuming it (Carr C T and Hayes R A, 2015). There are more and more new services focussing on the “present moment” and deleting content after its consumption, e.g. Beme, Tiiny, Vine or Wickr, to name a few.

In conclusion non-persistent content is already an established element of the social media landscape at this stage. The result of content not being accessible after the “present moment” has direct implications for publishers’ business models relying on monetising of shared and long-term accessible social media content.

As the longevity of social media news shortens dramatically by recent shifts in persistence within social networks, meaning content being accessible and shareable for shorter periods of time, the time to generate social referral traffic for news sites is getting shorter as well. The long tail effect (Andersen, 2004) for news articles in this category may be diminished completely if the content is no longer persistent within the social media landscape. With social referral traffic only being generated on a short term basis, a large portion of monetisation potential is lost for older news articles. This increases the pressure on publishers to refinance their articles on a short term dramatically.

Things might get even worse for many publishers with Facebook’s latest publishing feature, Instant Articles. Instant Articles allow publishers to display content in its entirety directly within the Facebook stream (Groden, 2016). The user does not have to leave the Facebook platform and can consume an entire article, including videos and interactive elements, seamlessly within the Facebook experience.

Although this makes sense from a user’s perspective, it increases the publishers’ dependency on Facebook drastically. With Instant Articles the amount of off-website content and with it the difficulty to monetise this content is increasing. Publishers may sell their own advertisement for Instant Articles but in the end Facebook is in charge of the platform (McAlone, 2016), a drastic difference from the publishers’ own web properties. As well as it may be a chance for smaller publishers with no large sales force in place to use Facebook’s ad sales in Instant Articles, it may just as well be a huge problem for larger media and news publishers.

With these developments in mind, many publishers would have to change their social media strategy drastically if they decide to change their business model from free websites with advertising revenues towards closed websites with paywalls. Since news content tends to be free within the social media landscape and certainly will remain free within Facebook Instant Articles for the time being, it is doubtful that publishers can drive many users into their paywalls through social referral traffic.

Especially with content being integrated in platforms like Facebook in better ways, the lock-in effect for most users is increasing. This development makes it more and more unlikely that users are willing to tolerate a disruption in an otherwise seamless social media experience just to consume content elsewhere, not even considering paying for it.


Conclusion

Summarised it can be stated that social referral traffic in general is worse for media and news publishing websites than other kinds of traffic and leads to fewer page views and higher bounce rates. This leads to a direct threat to advertising revenues for most publishers as the percentage of social referral traffic increases. As a result the current business model of many media and news outlets is in jeopardy.

With recent changes in the percentage of social referral traffic as well as in the persistence of social media content, the pressure on publishing companies to find alternative ways to monetise their inventory increases rapidly. If content is no longer available within social media after it has been consumed in the “present moment”, the potential to drive traffic with this content is very limited and short-term.

Additionally with Facebook latest publishing feature, Instant Articles, many users are kept out of the publishers’ web properties. Therefor it seems unlikely that the quality of social referral traffic, meaning its page views per visit ratio, is increasing for publishers’ any time soon.

Taking into consideration the rapid growth of the percentage of social referral traffic over the past year, it is clear that the pressure is increasing for many media and news publisher with no deceleration of this trend in sight.

Lastly, publishers’ actual or conceivable efforts to erect paywalls for compensation of underperforming advertising revenues on their websites might be compromised by new publishing features such as Facebook’s Instant Articles, which largely contribute to keeping users within the social network and off third party web properties.

Since the illustrated parameters have a tremendous effect on the bottom line for news websites and tend to change very quickly, it is more important than ever for publishing companies to act swiftly if they want to avoid impairing their market position any further.

Unfortunately, all attempts as of today do not seem to provide evidence for any extensive success. Therefor a prosperous step into the future requires rapid and substantial business model innovation.


tl;dr

Due to recent changes in social referral traffic to news websites and in the persistence of social media, current business models of digital news publishers are in jeopardy.


DISCLAIMER: This essay has been written for the seminar “Online and Mobile Media” during an international research exchange at the University of New South Wales (UNSW) in Sydney, Australia, within the “Next Media” master program at the University of Applied Sciences Hamburg (HAW Hamburg) in 2016. For more information or any questions please contact me at mail@moritzrecke.com.


Figures

Figure 1: Top Traffic Referral Source May – July 2015, Parse.ly Authority Report 8, The State of Tags in Digital Media

Figure 2: Parse.ly Network Traffic from Google Versus Facebook, Parse.ly Authority Report 8, The State of Tags in Digital Media

 

Google trends confirmes stereotypes

vox:

Portland likes coffee, and other accurate food stereotypes now confirmed by Google.

Congratulations, Washington, DC, you’re the most interested in “restaurants:”

google-trends-restaurant

Coffee, unsurprisingly, reigns supreme in Portland, OR:

google-trends-coffee

Wine wins the day in San Francisco:

google-trends-wine

See what else the folks at Google Trends found using search data to determine which large cities and towns care the most about different aspects of the food world.

Experiences with Google Apps from quite some time ago

While working at the international agency network Scholz & Friends, I implemented Google Apps as a SaaS business solution within the entire network across various locations all over Europe for 1200 users in 2010.

Google Apps Suite

In addition to some press around that project by Scholz & Friends, I was talking to quite some people about Google Apps at the time. One interview lead to a chapter in a book about ICT-Innovations: “ICT-Innovationen erfolgreich nutzen: Wie Sie Wettbewerbsvorteile für Ihr Unternehmen sichern” by Jens Böcker and Mark Klein, published in 2012.

I just stumbled over this book on the web a few days ago… I had almost forgotten about it. Although a lot has changed since 2010, many current reasons for starting with Google Apps or other cloud solutions are still the same. I hope the book was of any value for someone.

Case Study – Google Apps for Business

While working at the international agency network Scholz & Friends, I implemented Google Apps as a SaaS business solution within the entire network across various locations all over Europe for 1200 users in 2010.

Google created a case study with Scholz & Friends and published it on their success stories page dedicated to the German market in 2011. Among other clients such as GE, Genentech, Qype, Radio.de, Salesforce and myTaxi, Scholz & Friends is one of the most prominent customers.

google-apps-scholz-and-friendsThe case study can be found in a PDF named “Erfolgreiche Kreation dank zukunftsfähiger Technologie: Scholz & Friends nutzt Google Apps for Business”

Google has not yet shown they are truly serious.

Google has not yet shown they are truly serious. From the outside, they are an advertising company.

Julia White, a general manager in Microsoft’s business division speaking to The New York Times on the threat of Google Apps.

This quote will probably come back to bite her and Microsoft (as usual). While all eyes are on Microsoft’s fumblings within the Windows Division, far more important is the Office Division, since it’s the company’s largest money-maker. Conventional wisdom holds that this is and will remain a stronghold for Microsoft. But as Quentin Hardy suggests, the walls are showing some very real signs of weakness.

I haven’t used Office in years. I use Google Apps on a daily basis. I can’t see kids asking their parents to buy them Office for their new MacBooks. Maybe some get it bundled with PCs, but will any of them use it on a regular basis? Whoever wins the colleges will win the war. And I wouldn’t bet against Google in the long term.

(via parislemon)

________________

Google logo

Over the past few years I haven’t used Microsoft Office even if my company provided me with a licence. There is nothing I need, that couldn’t be done with Google Apps. In regards to presentations, I admit Apple’s Keynote is still far superior but it comes free with every new Mac.

As stated above, I am also convinced that whoever dominates the educational market, will be on the upside in the end. From my perspective it seems to be Google, by far.

Partners – Google for Work

Partners – Google for Work

Visiting Google Campus in London

Here are some more impressions from our visit to Google Campus in London. It is a non profit endeavour by Google to provide London with a hub for collaborative innovation in the tech startup scene. It’s located in Shoreditch, opened in 2012 and provides entrepreneurs with speedy wifi, a café, frequent networking and speaking events, a co-working place and access to accelerator programs like seedcamp.

campus-london-1

With a free permanent resident membership you can gain access 24/7 and hang out at the café or join the co-working space on Campus managed by Techhub at unbeatable rates. Also you can pitch your startup idea or any other input you might have at the CampusCam and it will be seen by the world on the corresponding Youtube Channel.

We met with Eze Vidra, the head of Campus London and Google for Entrepreneurs Europe at the Café to take a look at the vibrant culture at Campus. It is mostly organized by him with the help of Google 20% “volunteers” and provides more than 1000 events per year (e.g. Campus for Mums), weekly hands on feedback sessions, mentoring by Googlers and many things more. It’s alsways packed with people, so if you want a seat at the café you have to be there really early.

Apparently, it is a huge success for Google since it seems that Google Ventures might be coming to Europe. So far Google Ventures is only active in the US, so this would be a huge step forward for both the UK and the European startup scene. They might even come to Germany since Google just opened the startup hub Factory Berlin in June 2014. Techcrunch is already rounding up potentially team members for Google Ventures Europe.

Not surprisingly, Eze Vidra is at the top of that list:

“First up to be cited as a possible General Partner at Google Ventures in Europe is an obvious choice: Eze Vidra. As head of Campus London and (this year) head of Google for Entrepreneurs Europe, the reach-out programme aimed at startups, he is already a GV adviser.

Vidra is also a long-time Google employee, having launched Google Shopping in Spain and Local Shopping in the UK. Prior to that he held management leadership roles at Shopping.com in Israel, Gerson Lehrman Group in New York, Ask.com in Silicon Valley and AOL Europe in London, where he was the principal product manager for Search in EMEA.

And Vidra has become a well-known person in the tech startup scene in Europe, speaking at multiple conferences and turning his social media feeds into link bait for startup entrepreneurs. In 2012, he founded Techbikers, a non-for-profit cycling community for entrepreneurs that raises money for charity. We approached him about the speculation, but his email says he is on vacation.

One investor told us: “Eze is a slam dunk and has been seconded with GV for some time now as a part timer. As he’s head of campus he’s earned his way forward.”

The omens are strong. Sarah Drinkwater replaced him three weeks ago as head of Campus London and sources say he is very active on Product Hunt.”

Source: “Hire Someone Already! Google Ventures Mulls Its European Moves” techcrunch.com July 3 2014

Google Self-Driving Car Project

For more information visit http://googleblog.blogspot.de/2014/05/just-press-go-designing-self-driving.html