“Monetising mobile is the biggest challenge in the whole industry right now,” Bauer Xcel MD Christian Fricke told AdNews in his first interview after taking on the role to lead Bauer's digital business.
Facebook and Google are destined to earn 85 cents of every new digital ad dollar, leaving publishers with the leftovers. But as the two digital players battle it out for the biggest chunk of the mobile advertising market, Fricke believes the Google and Facebook rivalry could be a catalyst to the power they hold over publishers.
For our cover feature "The content profit squeeze - publishers held to ransom", Fricke was speaking to AdNews on the ever-increasing strength of Facebook and the impact it is having on Australian publishers.
In his first major move at Bauer, it was announced yesterday that Fricke had made three roles redundant at Bauer, admitting the publisher had not met its business targets.
He located to Australia from Germany to take the role at Bauer. He previously head of Bauer Xcel Germany, before working as MD at online publishing company Playbuzz.
“Facebook and Google know monetising mobile is the biggest problem for publishers and as they are competing against each other they are thinking on how to solve this,” he tells AdNews.
“They are in a better position to solve the monetisation problem than any publisher on their own and they know once they solve this they have an advantage above the other.”
Publishers have been playing catch up with the move to mobile, with the likes of Bauer, Pacific Magazines, News Corp and Fairfax all implementing “mobile-first” strategies for their digital assets. While the mobile medium has created convenience for the consumer, Fricke says it has had a significant impact on the price of advertising, as there is an overwhelming amount of inventory on mobile.
“Advertising dollars didn’t catch up to the speed of consumers shifting. I’m not optimistic mobile prices will catch up soon. Even if the demand doubles year-on-year, the prices won’t go up so we have to think of other ways to monetise mobile traffic.”
Fricke explains as the monetary model for mobile is disrupted, publishers need to adapt other revenue streams.
“On mobile you have to get closer to the transaction,” he said. “We can't just use if for branding. We have to really make sure users engage with this content and get closer to any sort of call to action.
“There needs to be some kind of transaction to keep them in the Bauer ecosystem.”
Incorporating e-commerce offerings into mobile sites is a model that has been widely adopted in Australia by NewsLifeMedia and PacMags, through publications including Taste.com.au and Marie Claire.
With Fricke now taking reign at Bauer, it is likely the global company will build on closing the sales loop through its titles.
Google and Facebook rivalry could benefit publishers
In Facebook’s 2016 Q2 results, Facebook CEO Mark Zuckerberg put Google on notice, saying it would be going after its cash cow – search advertising. Zuckerberg announced blue prints to tap into search advertising, although he didn't provide any specific time frame.
Fricke believes now Facebook is challenging the previous monopoly power Google held in search, it presents a better position for publishers.
“Five years ago when it was only Google, it didn’t have to help publishers. But now there's becoming a strong competition between Facebook and Google, they have to help others,” he says.
“Bauer and other publishers are now no longer as dependent on Google as social traffic has taken over SEO traffic.
“Four years ago Google would keep me up at night and now it doesn’t.”
Both Facebook and Google have introduced initiatives to improve the web experience for users and to help publisher’s get a leg up in the mobile world. Facebook’s Instant Articles and Google Accelerated Pages may have launched with the intention to benefit publishers, but the industry has been quick to challenge that belief, with the platforms ultimately pinching their ad dollars. Fricke thinks it's a good thing for publishers, but Facebook does need to work on the offering.
“When Facebook and Google come up with a new initiative, it is mostly wise to test it. You need to start with enough critical mass to get sufficient data, and then after a trial, you can decide if it's worth it,” he said.
Bauer's European arm has achieved some success with the use of Instant Articles (IA). While Bauer Australia does not currently use IA, Fricke says it is likely the media company will test it.
“Facebook knows publishers aren’t happy about the revenue of Facebook Instant Articles, so it knows it has to fix this to be a more publisher-friendly model or lose out to Google,” Fricke says.
Read more about the publishing power struggle in our cover feature 'The Content Print Squeeze – Publishers held to ransom' in the first monthly issue of AdNews. To read the full article download a digital version of AdNews on desktop, Apple or Android here for $5.99. You can also subscribe to the premium print edition here.
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