Axios Media Trends

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October 10, 2017

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1. Sandberg on the hot seat

Facebook COO Sheryl Sandberg will be interviewed by Axios' Mike Allen this Thursday at 9 a.m. in Washington. We'll livestream it on and on our Facebook page.

  • This will be the launch of a Facebook interview series with Axios, covering questions about the company, the 2016 election, and the platform's broader role in social media.
  • The series will cover the social, technological, political, economic, and privacy dimensions of platforms. Axios editors and reporters specializing in politics, tech, business and media will control the questions and coverage. The collision of these topics is the central focus of Axios' mission.
  • All interviews will be on the record, and posted on Axios. Facebook will link to the coverage on its Hard Questions blog, designed to explore difficult issues facing Facebook's global community.

Why it matters: This will be the first public interview of a senior Facebook executive since revelations that Russian-backed groups bought Facebook ads to sway the election. It comes during growing interest in Congress in the role big tech companies played.

Sound smart: This event is another in a long string of moves Facebook has made in the past month — from hiring political consulting firms, to public pleas for forgiveness, to taking out full-page newspaper ads — to reach lawmakers and political influencers in response to the Russia news. The company clearly thinks they have a major problem on their hands.

Check out my story in the Axios stream for the context surrounding the interview.

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2. D-Day for Facebook

Facebook plans to announce Q3 earnings Nov. 1, the same day it has agreed to meet publicly with the House Intelligence Committee. It's unlikely that any of the company's top executives, like Mark Zuckerberg and Sheryl Sandberg, will appear before Congress in Washington. Instead they will be focused on communicating to investors whether their ads business has been affected by the recent Russia controversy.

Why it matters: A key part of Facebook's success centers around growing its ARPU (average revenue per user) in the U.S. and Canada. The company has been expecting an ad revenue dip due to slowed ad loads in the News Feed, but it will be interesting to see if ARPU and user engagement is affected by the Russia ads controversy. A new PPP poll out Monday found that 58% of Americans have a less favorable view of Facebook knowing it allowed Russia to target American voters with ads.

3. Scoop: Only Twitter is submitting FEC comments

Twitter has informed a Federal Election Commission office that it will be submitting a written comment to the FEC on political ad disclosures, Axios has learned.

  • The FEC is expected to make public all of the comments shortly after the comment period closes on Nov. 9. These will likely be used to help inform the legislation being introduced around disclosures on Capitol Hill at the end of the month.
  • Facebook has been contacted, but has not made a commitment, a source said. The company has already written a comment on this proposed rulemaking, back in 2011, but it is unclear whether it will be updating their thoughts given the recent circumstances.
  • The FEC is in an earlier stage of talking to Google.

Why it matters: All three companies have indicated that they're open to assisting with ongoing inquiries, but so far only Twitter has submitted a comment in the most recent 30-day comment window.

FYI: If you're wondering why we need separate ad disclosures for Google and Facebook to begin with, it's worth reading the back story about how they got exemptions in the first place.

4. How the Russians operated under our radar

We're starting to see that Russian operatives intentionally used small, segregated campaigns across automated platforms that often aren't monitored by people, making it harder to get caught in the moment, if at all.

Why it matters: It will take a whole lot of investigative reporting to understand the extent of the Russian disinformation campaign that was used to meddle in the election and cause division, but we now have a good amount of context that can help us understand smart places to look.

How it worked: These were similar tactics used by spammers trying to traffic web pages to sell ads against them. Outlets like BuzzFeed and The Daily Beast have done a particularly good job of looking in the right places:

  • Advertising on automated platforms, where the currency comes from Russia and the ads are micro-targeted to social and political groups.
  • Fake social media accounts and pages that spur divisive messaging from people who seem to have false identities or fake/bot accounts.
  • Insidious messaging around key social, political news events, like Black Lives Matter or the Muslim ban.

We weren't prepared: The government's lack of awareness, and thus regulation of social media technology, leaves tech platforms to monitor themselves — which didn't provide much incentive for them to keep close tabs on how their platforms were being used for electoral manipulation.

The U.S. has no governing body that's responsible for regulating the internet, other than false commercialization (handled by the FTC) and illegal content, like pornography (handled by the FCC). Fake news is not illegal, although we are seeing now that it can be weaponized.

Go deeper: We've got numbers in the Axios stream.

5. Big Media strikes back

Media companies, for the first time ever, are beginning to feel they have leverage in their fights with Facebook and Google, and are starting to think more strategically about how they can leverage their own resources to distribute their content and sell ads.

  • The networks are fleeing Netflix for Hulu and their own streaming platforms: NBC, Fox, FX and Disney are all pulling all or some of their content from Netflix. They're hoping to force consumers to Hulu, where Disney, Fox, Comcast and Time Warner share a stake, or their own streaming properties, which are in the works.
  • Everyone is trying to create their own ad network: Disney is creating its own premium ad network to serve as a more transparent alternative to the scale of the duopoly. NBC has created its own self-serve programmatic ad software to "directly take on Facebook and other social nets." AT&T CEO Randall Stephenson said last week that his company's potential merger with Time Warner "is all about making ads more effective and profitable," according to the NY Post.
  • Digital publishers seem less enthused by Instant Articles: The New York Times has already dropped them, as have The Guardian, Quartz, Forbes and Hearst. A recent report shows that Facebook engagement for brands and publishers has fallen 20% this year.

What's next: Watch for very aggressive reporting on the flaws of Google and Facebook's platforms, and for companies to invest even more in competing platforms and tech.

Also: Watch for more reports about "who can take on the duopoly." People have been throwing out traditional answers, like Amazon, and not-so-conventional ones, like Giphy. The reality is that we've let these platforms grow so big for so long, that any company would have a long way to go until it could truly amass a big enough audience to create a rival ads business — (see below).

6. Amazon's big advertising push

Amazon is going all-in on its advertising efforts, with recent reports charging that the Seattle giant is going after YouTube's turf:

  • Doubling down on video ads: Video advertising is lucrative, and according to CNBC, Amazon is taking meetings about advertising against video content, with one potential program that would include sponsored content. It's also met reportedly met with technology companies to discuss preventing inappropriate content from appearing next to ads.
  • More ad sales staff: CNBC reported last week that Amazon is hiring 2,000 people, including ad sales staff, to move into its Hudson Yards office in New York City — the advertising hub of the U.S. On its Q2 earnings call, Amazon CFO Brian Olsavsky said there's an accelerated growth in hiring for Amazon's ad sales and web services teams.
  • Success with sports: Amazon's SVP of worldwide business development said the company gets 22 ad slots for every NFL game they stream and that it's "basically sold out" of its 11 game contract.
  • Brand safety: According to a report from the IAB's digital conference in the U.K., Amazon executives touted the company's ability to to reach users without compromising brand safety because their platform is not news and information-based, a key advantage they have over rivals Google and Facebook.

Why it matters: Amazon made nearly $1.4 billion in advertising revenue last year — more than Snapchat, Yelp or Pandora. Per eMarketer, it's slated to grow its ad business by another 30% this year to $1.8 billion. While Google and Facebook are the clear leaders in online advertising, Amazon is predicted to grow its ad businesses at a faster rate than either company.

"A force to be reckoned with," JPMorgan Chase CMO Kristin Lemkau said at the Association of National Advertisers' Masters of Marketing Conference on Thursday. "I think they feel like the first big, emerging advertiser that can be grouped with Facebook and Google."

7. NEW! Flipboard to reward fast publishers with more traffic

Flipboard is announcing two big changes today.

  1. They're creating incentives for good web publishers — ones that are fast, efficient and have clean user experiences — to be algorithmically rewarded with more traffic on Flipboard's platform. Such publishers will be distinguished on the platform with a red lightening bolt, similar to the way Google AMP labels publishers (as of last week, now with blue "instant" labels.)
  2. They're creating a self-service platforms for new publishers to sign up and apply to be on Flipboard's platform. The company will use machine learning technology to filter through the results. Flipboard CEO Mike McCue tells Axios "We will be editorially looking at all of the applications, and using algorithms to make the review process efficient."

"This is a way for us to highlight that mobile web has advanced a bit," McCue tells Axios. "We want to encourage publishers to create high-performing mobile websites and reward them for doing that."

Why it matters: Publishers Axios has spoken to say they've been seeing an increase in traffic distribution from Flipboard, and as Axios reported earlier this year, Flipboard has become one of the top traffic referrers for publishers next to Google and Facebook, according to data. McCue says that given its position as a driver of web traffic, "Our hope not just good for Flipboard but mobile web overall."

8. The internet gets a good cleaning

The biggest traffic distributors are trying to force publishers to clean up their websites with faster and less-intrusive advertising experiences and simpler web formats.

  • Flipboard will now reward publishers with better experience better placement on the platform. (see above)
  • Google is planning to put an ad blocker in its Chrome web browser in the coming months, which would filter out ads that are deemed intrusive based on standards that have been mapped out by a third-party group.
  • Apple's Safari browser will start blocking autoplay videos and add a feature that stops ad tracking technology from using a user's web behavior to target ads to them.

Publishers and trade groups are also starting to rethink how they work with advertisers to weed out bad ads and create better user experiences:

  • Fusion Media is trying out a new system that rewards advertisers that make the most engaging ads by giving them bonus impressions, the Wall Street Journal reports.
  • The Washington Post built a team called RED (research, experimentation and development) that focuses solely on user-first commercial products and technologies on and off the Washington Post. One example is Zeus, a proprietary technology engine that guarantees that all ads will load in under two seconds.
  • The Coalition for Better Advertising, made up of publishers and platforms, is leveraging consumer insights and cross-industry expertise to develop and implement new global standards for online advertising that address consumer expectations.

Why it matters: Speed and user experience are important. The smartest players in the digital world get that. Publishers caught in the stone age thinking they'll be able to survive in an evolving web ecosystem with invasive pop-up ads or with millions of cookies dropped on their sites from marketing partnerships are toast.

Oh, the irony: New from Digiday: "Google AMP's page speed is great for readers, but it might be terrible for publishers, some of which are seeing readers get through the content and leave before their ads have finished loading," Ross Benes writes.

9. Gut Check: Speed matters

Google, which powers some of the most lucrative and widely-used ad technology in the world, says in its most recent mobile data and measurement report that a neural network designed to measure internet interactivity found that as page load time goes from one second to seven seconds, "the probability of a mobile site visitor bouncing increases 113%"

The report also found that as the number of elements — text, titles, images — on a page goes from 400 to 6,000, "the probability of conversion drops 95%."

10. 1 brainwashed thing: We spend 12 hours/day with media

Individuals in the U.S. manage to spend the equivalent of half a day consuming media, according to eMarketer's latest media time spent figures. In total, eMarketer estimates that adults will spend an average of 12 hours, 1 minute per day with major media this year. Here's the breakdown by medium:

  • Digital: 5.53 hours (3:17 hours on mobile; 2:03 hours desktop/laptop; 0:33 hours on other connected devices)
  • TV: 3.58 hours
  • Radio: 1.26 hours
  • Print: 0:24 hours
  • Other: 0:21 hours

Why it matters: "People have become more efficient at multitasking, thanks largely to mobile devices (excluding voice)," according to the study. "Multitasking via mobile is primarily responsible for the overall increase in time spent with media."

Note: eMarketer counts each minute of media consumption time regardless of whether it's simultaneous with any other media. Therefore, total media consumption time continues to grow, even as the number of hours in a day remains the same.

BONUS: NBC digital launches opinion section

NBC Digital is launching an opinion section today called THINK, which will publish 2-3 premium pieces per day and 2-3 videos per week. It will be co-edited by Meredith Bennett-Smith and Megan Carpentier.

You can view more details and a list of the contributors on the Axios stream.