Facebook Watch – Not the Superpower Facebook Hoped It Would Be
Not just publishers, Facebook wants to diversify its business. And, to put it simply, it’s failing in its attempt. Can’t guess where we’re going?
Facebook Watch. One of the ambitious initiative by Facebook to compete against the video streaming giants. Even with billions of users, the largest social network struggles to keep the ‘Watch’ buoyant.
Source: Bloomberg
Why Facebook Needs Watch?
If you’re wondering why Facebook would invest a billion to run Watch, then look no further.
– Saturating Market
Facebook has over 2 billion users worldwide, but it’s not enough for the company to beat the Wall Street estimates. It has to add new users from the key markets and that’s a big problem.
Well because
China, a country with 800 million internet users, blocked Facebook and has its own networking platforms to fill the void.
The social network already reached a huge portion of the Internet users – More than 70 percent, excluding China. It means it’s not easy anymore.
– Deflating Sessions
Though Facebook managed to get billions of daily active users, the duration of the average session is surprisingly under 90 seconds. Apparently, users aren’t engaging with the app as they did before.
– Narrowing Margins
The decreasing session duration has the potential to impact the company’s bottom line (ad revenue). Besides, Facebook already warned the investors about the rough road ahead – Slowing revenue growth and narrowing margins.
Takeaway:
So, to oversimplify it, Facebook Watch is a crucial attempt to solve most of its problems. If you get users into Watch, session duration will obviously increase and the social network has the chance to diversify its revenue from News Feed.
“Am I buying into something I can’t get anywhere else?”
– Mark Wagman, MediaLink.
Unlike stories, Watch isn’t growing on its own. The reason? Both brands and users can’t find anything unique or compelling to try ‘Watch’. It’s been more of a video newsfeed rather than a video streaming service. There’s a lot needs to be done and let’s see whether Facebook continues the kitchen-sink approach to get us into Watch.
“Ad auction systems are obscure by design” – GDPR Issue Balloons
We usually don’t count the number of times we’ve talked about privacy law in here. But it’s time to crunch those numbers. Another week, another opportunity for data authorities to criticize adtech.
But this time, it’s not the players. The way we transact impression (RTB) has been questioned by Panoptykon Foundation, a Polish privacy watchdog. Noticeably, the complaint cites ad categories designed by Google and IAB as the supporting evidence.
Article 5 of GDPR
The charge against the real-time bidding refers to the article 5 of GDPR, which states that a party shouldn’t process personal data unless it can protect the data from accidental losses.
Panoptykon argues that in RTB, as the bids are sent countless third parties to place personalized ads, the ad auction system thereby breached the law. The problem is the bids usually contains personal information like browsing history, cookie id, etc.
Here’s the counter-argument from IAB.
IAB disagrees with the authority saying that “the Content Taxonomy, OpenRTB, and other protocols are not themselves subject to GDPR, which regulates how organizations use such technologies to process or direct the processing of personal data for specific purposes.”
It’s like an HTTP protocol. Companies can choose to use the category as per the land’s law. Google, unsurprisingly, came up with a banal response.
Takeaway:
We believe its part of the process. Google recently faced a £44m fine for the lack of transparency in its consent-obtaining mechanism. Another french adtech company ‘Vectuary’ got sued last year.
This complaint will help the ecosystem to reevaluate our reliance on cookies. Either we’ll see the ID-based solution much faster or PMP/PG deals growing (faster than expected) across the market.
Will we be skipping the ad exchanges all together?
The privacy laws and cookies will continue to create problems for the adtech. And, as we mentioned above, OPM (Open MarketPlaces) are likely to get scrutinized more than the direct deals.
Some are even questioning the existence of OPMs in the next 5 years.
Will be bypassing ad exchanges?
No, at least not in the near future.
Despite the increasing popularity of programmatic direct deals, ad exchanges continue to serve almost all the publishers. If long-tail publishers can’t exist without ad networks, mid-sized publishers can’t run their businesses without open exchanges. Majority of them could easily go bankrupt.
In addition, adtech is on its way to revamp itself completely. RTB 3.0, unified log-in, ID-based solutions, and Supply Path Optimization (SPO) are some of the trends poised to shape the industry.
OpenX, one of the largest ad exchanges started to partner directly with advertisers directly. This means no traditional trade desk, DSP, and ad exchange structure. On the other hand, buyers themselves are willing to cut down the unessential partners and connect as directly as possible. At last, we’ll see consolidation and ad exchanges with improved capabilities.
Moments That Matter
Google, Facebook Ad Sales Seen Rising Even Amid Privacy Woes – Duopoly holds the ground.
Profitable Growth is the North Star. Margin isn’t. A Q&A with Bloomberg CEO Justin Smith – Digiday.
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